Geojit Financial Services LtdQ3 FY21Capital Markets

Geojit Financial Services Ltd

Q3 FY21 Earnings Call Analysis

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

N/A

Order

N/A

Capex

Yes

1 of 3 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 3

→Geojit plans to deepen market penetration by opening around 25 small branches in Kerala and Tamil Nadu semi-urban areas, each manned by a couple of people, with an additional 300 manpower expected to be hired this year, primarily in sales and customer interfacing roles.
→The financial planning business (STEPS) is expanding, with plans to open about half a dozen more branches by the end of the quarter; the initial branch is already marginally profitable.
→There is growth observed in distribution income from bonds and AIF products, driven by increasing client interest, especially from long-term investors in natural markets.
→Mutual Fund AUM has grown significantly, with revenues up 47% year-on-year, indicating ongoing momentum.
→Delivery volumes in the cash market have increased to 49% of total volumes, supporting higher yields and brokerage revenue growth.
→Overall, management is optimistic about growth driven by expanded distribution, advisory services, and leveraging the large NRI client base through new ventures like GIFT City.

Margin guidance

Category 3

→Operational income for 2QFY22 was Rs. 127 crores, up 17% YoY, indicating positive growth momentum.
→PAT rose 22% YoY to Rs. 40.47 crores, showing strong profit growth.
→Brokerage revenue up 8% YoY, with improved yields despite a dip in cash market volumes.
→Financial product distribution (Mutual Funds, Insurance) income grew 45% YoY.
→Mutual Fund AUM increased by 53% YoY to Rs. 7,472 crores, supporting future fee income.
→Delivery volumes in brokerage increased from 35% to 49%, reflecting higher quality and potentially higher yield.
→Expansion plans include opening ~25 small branches and hiring ~300 more staff in sales/customer interfacing, suggesting capacity for revenue growth.
→New business ventures like the GIFT City office and STEPS advisory branches are expected to contribute to future earnings.
→Overall, management expects continued growth driven by diversified income streams, deep market penetration, and increasing client base.

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Fundraise plans

→There is no specific mention of any current or future plans for fundraising through debt or equity in the provided transcript.
→The management primarily discusses operational growth, branch expansion, manpower recruitment, and business diversification.
→Focus is on minimizing fixed costs and scaling up branches and services.
→No direct reference to capital raising activities or plans for issuing new equity or incurring new debt was made during the call.

Order book

The transcript provided does not mention any details regarding the current or expected order book or pending orders for Geojit Financial Services. The discussion mainly covers topics such as manpower hiring plans, branch expansions, business segments like brokerage, mutual funds, insurance, loan distribution, and new ventures like GIFT City, but there is no reference to order books or pending orders.

Capex plans

Yes

→The company plans to open around 25 small branches in natural markets (Kerala and Tamil Nadu), each manned by a couple of people, aimed at deepening market penetration.
→They are looking to hire another 300 manpower primarily in sales/customer interfacing for these new branches.
→Regarding GIFT City, the company plans to set up an office there in the current quarter to connect NRI clients through brokerage and AIF business.
→The company intends to keep fixed costs minimal, adhering to regulatory requirements regarding premises (likely preferring renting over owning).
→The financial planning/advisory business ("STEPS") is expected to open half a dozen new branches by the end of the quarter, aiming for profitable operations.
→No explicit mention of large-scale capital expenditure; focus is on modest branch expansion and related manpower.

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