Edelweiss Financial Services Ltd reported a 40 per cent increase in consolidated profit after tax which stood at Rs 55.67 crore for the quarter ended June 30, 2013, compared with Rs 39.8 crore for Q1FY13. Total income rose to Rs 620 crore, an increase of 17.65 per cent in the quarter over Rs 527 crore in the same period a year ago.
Rashesh Shah, chairman and CEO, Edelweiss, said, “We continue to record improvement in our financial and business indicators following our long-term strategy to diversify across businesses, asset classes and client segments. Following this strategy, we have extended the streak of improving our performance on a quarter-on-quarter basis to seven straight quarters now despite the tough operating environment.”
He said the company’s priorities for FY14 include focusing on improving efficiency and productivity and building scale in retail financial services businesses.
Due to RBI’s measures to arrest the fall of the rupee, the firm expects the operating conditions to be more challenging in the short term.
Edelweiss is backed by Carlyle, Greater Pacific, Singapore’s GIC, SAIF Partners, Sequoia Capital and others.
The company’s shares last traded at Rs 30.45 a unit, up 0.5 per cent on the BSE in a weak Mumbai market on Friday.
The company’s fee and commission income from agency businesses was higher at Rs 83 crore for Q1 FY14 compared with Rs 71 crore in the same quarter last year. Fee and commission growth reflects the growing contribution from its retail financial markets businesses and the revenue stream includes income from broking, corporate finance advisory, asset management and wealth advisory businesses.
Interest and capital based income for Q1 FY14 was Rs 525 crore, up from Rs 450 crore in Q1 FY13. This income stream includes income from credit, including the housing finance business, the commodities business and treasury operations.
Its life insurance business under Edelweiss Tokio Life Insurance completed two years of operations at the end of last quarter. It recorded gross premium of Rs 11 crore in the quarter compared with Rs 3 crore in Q1 FY13. The business has presence in 39 cities across India through 46 branches. Edelweiss entered the life insurance space through a joint venture with Tokio Marine of Japan.
Operations of Edelweiss are organised around four broad business groups – credit including retail finance, commodities, financial markets including asset management and life insurance.
The total credit book of the group including retail finance and corporate finance stood at Rs 6,623 crore as of June 30, 2013, up 27 per cent over Rs 5,218 crore as of the end of Q1 FY13.
Retail finance business offers housing mortgages including small-ticket housing loans, loans against property and SME finance. As at the end of last quarter, it had a loan book of Rs 1,826 crore compared with Rs 946 crore at the end of Q1FY13, a growth of 93 per cent.
The fixed income advisory business handled 14 transactions in Q1 FY14, including long-term bond placements for firms like Exim Bank, SAIL, PFC, Reliance Home Finance, Tata Finance, Kotak Mahindra Prime, Mahindra Finance and Sundaram Finance. In addition, the debt restructuring business handled three advisory transactions, it said.
Financial markets and asset management business
With industrial capex investment on the back burner, the company’s corporate finance advisory business continued to witness extremely slow deal closures and handled just two transactions in Q1 FY14 but it said the deal pipeline continues to be strong.
On the alternative asset side the firm had total assets under management of around $700 million at the end of Q1 FY14, including the structured products portfolio. During the quarter this business achieved the first close of the new stressed assets-focused E-STAR Fund at Rs 135 crore.
The retail asset management business manages 10 funds across equity, debt and liquid schemes, with average assets under management of Rs 238 crore last quarter. This business has an active base of around 9,500 investors and a distributor base of over 3,100 at the end of the quarter.
(Edited by Joby Puthuparampil Johnson)