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    Share India Sec.

    SHAREINDIAMixed
    Financial Services·30 Jan 2025
    Management Summary

    Share India Securities experienced a challenging Q3 FY25, with significant QoQ declines in both consolidated revenue and PAT, primarily attributed to new SEBI regulations impacting equity derivative turnover and market liquidity. Despite the headwinds, the company highlighted strong growth in its NBFC and MTF segments and reiterated its long-term strategy of diversification into wealth management, strategic investments like MSEI, and retail expansion through technology, aiming for a rebound after a period of market consolidation.

    Highlights

    8

    • Consolidated revenue declined 24% QoQ to ₹342 crores from ₹453 crores in Q2 FY25.

    • Consolidated PAT decreased 34% QoQ to ₹82 crores from ₹124.24 crores in Q2 FY25.

    • Consolidated EPS stood at ₹3.66 per share for Q3 FY25.

    • Average Daily Turnover (ADTO) dropped to ₹8,200 crores per day in Q3 FY25 from ₹10,400 crores in Q2 FY25.

    • NBFC loan book grew to ₹253 crores as of 9M FY25, up from ₹195 crores in Q2 FY25.

    • MTF book increased to ₹361 crores as of 9M FY25, up from ₹260 crores in Q2 FY25.

    • Net worth on a consolidated basis reached approximately ₹2,300 crores by December 2024, with a target to cross ₹2,500 crores by FY25 end.

    • The company made a strategic investment, acquiring approximately 5% equity in Metropolitan Stock Exchange of India (MSEI).

    Concerns

    1

    • Impact of new SEBI regulatory changes on equity derivative framework and turnover.

    What Changed1

    vs Q4 FY25

    Tone shiftGood → Mixed

    Key financials

    Single quarter

    10 metrics
    1. 01Consolidated Revenue₹342 Cr-24%QoQ
    2. 02Consolidated PAT₹82 Cr-34%QoQ
    3. 03Consolidated EPS₹3.66
    4. 04Standalone Revenue₹259 Cr-29.0%QoQ
    5. 05Standalone PAT₹60 Cr-39%QoQ

    Guidance & targets

    8
    CategoryTargetPriority
    Market Share
    MSEI Cash Market Launch
    Q1 FY25-26
    		Medium
    Market Share
    MSEI Derivative Product Launch
    4-5 months
    		Medium
    Profitability
    Regulatory Impact Consolidation
    1-2 quarters
    		Medium
    Other
    PMS License Clearance
    2-3 months
    		High
    Other
    Wealth Management/PMS Rollout
    Quarter 1 or next financial year
    		Medium
    Other
    Wealth Management Gestation Period
    1-2 years
    		Medium
    Other
    Consolidated Net Worth
    crossing Rs. 2,500 crores
    		High
    Margin
    MTF as Revenue Source
    great line item
    		High

    Risks & concerns

    3
    RiskSeverity

    Impact of new SEBI regulatory changes on equity derivative framework and turnover.

    The rollout of the 1st Phase of measures to strengthen equity derivative framework and standardizing exchange charges had a sizeable impact on turnover, with more regulations expected by April 1st. — Management acknowledged

    high

    Low liquidity and unwarranted spikes in indices affecting turnover.

    Due to low liquidity, the market witnessed unwarranted spikes in indices, which negatively affected the company's turnover in Q3 FY25. — Management acknowledged

    medium

    Market consolidation period due to regulatory adjustments.

    Management expects a consolidation period for one or two quarters as participants adapt to new regulations, impacting near-term volume and margins. — Management acknowledged

    medium

    Q&A highlights

    3

    “MSEI has already, you know, applied for the expiry of their contract on a certain day, which still is not out. So, we believe that if they get the clearance from the SEBI, there will be challenges. But once they get the clearance and this product, people will definitely love to trade on this product because the opportunities are not much which they were earlier.”

    This question explores the rationale and future prospects of the company's strategic investment in a new exchange, highlighting potential new product launches and regulatory dependencies.

    asked by Ravi Shah

    3 min read6 chapters

    Detailed Narrative

    01

    Q3 FY25 Financial Performance Overview

    Share India Securities reported a challenging Q3 FY25, with consolidated revenue declining 24% quarter-on-quarter to ₹342 crores from ₹453 crores. Consolidated Profit After Tax (PAT) also saw a significant 34% QoQ drop to ₹82 crores, down from ₹124.24 crores in the previous quarter. Standalone performance mirrored this trend, with revenue at ₹259 crores (down 29% QoQ) and PAT at ₹60 crores (down 39% QoQ). Consolidated EPS for the quarter stood at ₹3.66 per share.

    02

    Impact of Regulatory Changes and Market Dynamics

    The decline in Q3 FY25 performance was primarily attributed to the first phase of SEBI measures to strengthen the equity derivative framework, standardizing exchange charges, and increased Extreme Risk Margin (ELM). These changes led to a 21% QoQ drop in Average Daily Turnover (ADTO) from ₹10,400 crores in Q2 to ₹8,200 crores per day in Q3. Management noted that low liquidity and unwarranted spikes in indices further affected turnover, expecting a consolidation period for one to two quarters as the market adapts.

    03

    Strategic Investment in Metropolitan Stock Exchange (MSEI)

    The company completed a strategic investment, acquiring approximately 5% of the equity in Metropolitan Stock Exchange of India (MSEI) for ₹2 per share. Management believes this investment will open up significant business opportunities and increase market reach. MSEI is expected to launch its cash market in Q1 FY26 and derivative products within the next 4-5 months, potentially becoming a competitive third exchange after receiving SEBI clearance for new products like weekly contracts.

    04

    Diversification into Wealth Management and NBFC Growth

    Share India is actively diversifying into wealth management, with board approval for PMS registration and plans to launch an AIF. The company expects to receive SEBI clearance for its PMS license within the next 2-3 months and aims to roll out wealth products by Q1 or Q2 of the next financial year, focusing on Ultra HNI and HNI segments. The NBFC arm, Share India Fincap, demonstrated strong growth, with its loan book increasing to ₹253 crores (from ₹195 crores in Q2) and net worth exceeding ₹120 crores as of 9M FY25.

    05

    Growth in MTF Book and Technology Initiatives

    The Margin Trading Facility (MTF) book continued its growth trajectory, reaching ₹361 crores as of 9M FY25, up from ₹260 crores in Q2 FY25. This growth is driven by targeting retail clients and offering a 360-degree bouquet of services. The company emphasized its investment in technology through acquisitions like uTrade Algos, Algowire, and Silverleaf, aiming to empower retail with algo trading and provide in-house tech solutions for faster time-to-market and client retention.

    06

    Strengthened Capital Base and Future Outlook

    Following a successful rights issue, the company's consolidated net worth stood at approximately ₹2,300 crores as of December 2024, with a target to cross ₹2,500 crores by the end of FY25. This robust capital base is expected to support new initiatives, product portfolio expansion, and retail growth. Management expressed optimism that the market will stabilize after the current regulatory adjustments, allowing the company to leverage its diversified offerings and technology investments for future growth.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.