Dear all,
Unfavorable market conditions hinder performance
· Geojit's AUM increased by 4.9% YoY, but decreased sequentially by 8.0% to INR 233bn, with Depository assets (Asset under Holding) noted at INR 204bn. 12% of total assets were contributed by JV ventures abroad.
· Geojit's broking yields declined to 0.056% in 4QFY16 vs 0.067% in 3QFY16 amidst slower growth in equity turnover volumes.
· Average daily turnover (without currency derivative segment) increased by 32.7% QoQ to INR 11.9bn in 4QFY16, however decreased by 7.0% on a year-on-year basis.
· Cash market volume increased by 11% compared to previous quarter & decreased by 11% compared to last year same quarter. F&O volume increased by 36% and decreased by 7% respectively.
Valuation: We expect the strengthening of the equity markets in the near term to bid well for the company. Consequently, we rate the stock a MARKETPERFORMER and arrive at revised target price of INR 41 (Previous Target Price: INR 33), implying a P/BV of 1.4X FY18E. Risks: Cyclicality of broking income, muted performance of overseas subsidiaries and stiff competition from discount brokers.
Regards,
CSEC Research
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