Detailed Narrative
Strong Q2 FY25 Performance Amidst Regulatory Shifts
Share India Securities reported a robust Q2 FY25, with consolidated revenue reaching ₹453 crores, marking a 24% YoY and 9% QoQ increase. Consolidated Profit After Tax (PAT) grew 10% YoY and 21% QoQ to ₹124 crores, with the net profit margin improving significantly to 27.45% from 24.86% in the previous quarter. Management highlighted this as one of the best quarters in the company's history, expressing confidence in adapting to recent SEBI regulatory reforms, despite acknowledging the challenging nature of the changes.
Strategic Diversification and New Verticals Driving Growth
The company is actively diversifying its revenue streams beyond traditional broking, with new verticals showing promising results. The Margin Trading Fund (MTF) book stood at ₹200 crores as of September 30, 2024, and the annual target for FY25 has been increased to ₹300 crores, with a further target of ₹550 odd crores for FY26. The Institutional Desk has successfully onboarded over 100 clients within a year, and the Merchant Banking division generated ₹10 crores in Q2 FY25, contributing to a more sustainable business model.
Expansion into Wealth Management and International Markets
Share India is venturing into wealth management with Board approval for a new subsidiary, 'Share India Wealth Multiplier,' which will focus on AIF and PMS. This move aims to strengthen fee-based income. Concurrently, the company is pursuing international expansion through Gift City and its Singapore subsidiary, despite experiencing some volatility in international trading in the last quarter due to external market spikes, particularly in the Japanese market.
NBFC Business Restructuring and Asset Quality Improvement
Acknowledging industry-wide stress in the MFI segment and rising Gross NPAs, Share India is strategically restructuring its NBFC business. The company is shifting its focus towards collateral-based lending, aiming for a 50% collateral-based and 50% unsecured book. Corrective actions include closing branches in high-NPA regions like Punjab and Haryana and focusing on more stable markets to improve asset quality.
Retail Client Acquisition and Digital Integration Initiatives
The active customer base is currently around 12,000, with an ambitious target to acquire 1 lakh retail customers in the next two years, primarily leveraging its uTrade Algos product. To support this growth, the company is opening new retail branches in Tier-3 cities and major metros like Calcutta and Mumbai. Furthermore, Share India plans to integrate its mutual fund platform with its retail IBT platform by Q3 FY25 to enhance cross-selling opportunities across its 319 branches.
SME IPO Business Targets and Credibility
In the SME IPO market, Share India aims to maintain its 3% market share in terms of the number of issues for FY25, while targeting a higher single-digit market share in terms of funds raised by focusing on larger ticket size IPOs. The company has 6 DRHPs already filed and plans to complete 18 IPOs before March 31, 2025. Management emphasized its strong institutional desk and net worth exceeding ₹2,000 crores as key factors for credibility and attracting quality companies.
Long-term Revenue Mix and Profitability Outlook
Management provided a clear long-term vision for revenue diversification, projecting that subsidiaries will contribute at least 25% of consolidated revenue, potentially rising to 30-35% in the coming years. Within the standalone entity, non-trading businesses are targeted to contribute 35-40% of revenue next year, with overall trading revenue not exceeding 40% of total revenue in three years. The company expects to maintain similar PAT margins (around 27%) going forward⏳, reflecting confidence in its sustainable business model.