Share India Securities Limited — Q3 FY25 earnings call

Call held 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

  • 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

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

Key financials

  1. Consolidated Revenue ₹342 Cr -24%QoQ
  2. Consolidated PAT ₹82 Cr -34%QoQ
  3. Consolidated EPS ₹3.66
  4. Standalone Revenue ₹259 Cr -29%QoQ
  5. Standalone PAT ₹60 Cr -39%QoQ
  6. Standalone EPS ₹2.67
  7. Average Daily Turnover (ADTO) ₹8,200 Cr -21.1%QoQ
  8. NBFC Loan Book ₹253 Cr +29.7%QoQ
  9. MTF Book ₹361 Cr +38.9%QoQ
  10. Consolidated Net Worth ₹2,300 Cr

What they filed

Q1 FY27: revenue up 31.4%, net profit up 47.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue453 342 239 341 341 −25%372 +9%416 +74%448 +31%
EBITDA186 131 52 138 159 −15%156 +19%117 +125%201 +46%
Net profit124 82 19 84 93 −25%89 +9%58 +205%124 +48%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Market Share

  • MSEI Cash Market Launch Market Share · Q1 FY26 · Medium confidence Q1 FY25-26
    we can see in Quarter 1 FY25-26 we can see the cash market should be out.

    — Sachin Gupta, CEO & Whole-Time Director

  • MSEI Derivative Product Launch Market Share · next 4-5 months · Medium confidence 4-5 months
    I think they are planning to start their cash market in next quarter or may be in next 4-5 months. Then, slowly and gradually, we can see that they will also introduce their derivative product for the F&O segment.

    — Sachin Gupta, CEO & Whole-Time Director

Profitability

  • Regulatory Impact Consolidation Profitability · next 1-2 quarters · Medium confidence 1-2 quarters
    we can see consolidation for one or two quarters, but at Share India level, we are very positive that we will be bound very strongly after the brief consolidation.

    — Sachin Gupta, CEO & Whole-Time Director

Other

  • PMS License Clearance Other · next 2-3 months · High confidence 2-3 months
    we believe that the next 2 months or 3 months we will get the SEBI clearance.

    — Sachin Gupta, CEO & Whole-Time Director

  • Wealth Management/PMS Rollout Other · Q1 FY26 or FY27 · Medium confidence Quarter 1 or next financial year
    we roll out the wealth Company or wealth products by quarter 1, later part of Quarter 1 or maybe Quarter 2 of next financial year.

    — Sachin Gupta, CEO & Whole-Time Director

  • Wealth Management Gestation Period Other · 1-2 years · Medium confidence 1-2 years
    So, wealth is a product which has its own gestation period. So, maybe "1" or 2 years will take off slowly, we will take some time to push it really hard.

    — Sachin Gupta, CEO & Whole-Time Director

  • Consolidated Net Worth Other · by the end of the year · High confidence crossing Rs. 2,500 crores

    From Rs. 2,300 crore (Dec 2024) today

    As of December, we have net worth on consolidated basis around Rs. 2,300 crore and by the end of the year possibly will be crossing Rs. 2,500 crores of net worth.

    — Kamlesh Shah, Managing Director

Margin

  • MTF as Revenue Source Margin · long-term scenario · High confidence great line item
    going forward in a long-term scenario, MTF as a revenue source would be a great line item in the Share India's income statement.

    — Abhinav Gupta, President, Corporate Strategy

Risks & concerns

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

    high

    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

  • Low liquidity and unwarranted spikes in indices affecting turnover.

    medium

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

    Management acknowledged

  • Market consolidation period due to regulatory adjustments.

    medium

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

    Management acknowledged

Q&A highlights

3 direct
Strategic investment in Metropolitan Stock Exchange of India (MSEI) and its growth potential. Direct
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

Reasons for the significant decrease in Average Daily Turnover (ADTO) from ₹10,400 crores to ₹8,200 crores. Direct
SEBI new regulations have been imposed because of which we see that the we used to have expiry on daily basis. Now, we have only two expiries in a week and that too of only the benchmark index. So, that actually dented the volumes. And because of the low volumes, we are observing lot of sharp spikes in the index where we have expiries in a week. So, both of these things are leading to the low participation and also, the major reason is increase in the ELM. ELM is the extreme risk margin on expiry day.

This addresses the core reason for the decline in broking revenue, directly linking it to recent regulatory changes, reduced expiry options, and increased extreme risk margins, which are critical for understanding near-term performance.

Asked by Ayushi

Strategy and contribution of the newly approved Portfolio Management Services (PMS) and broader wealth management initiatives. Direct
PMS is just the starting point of the entire strategy, though individually PMS might not be able to contribute a very big of deal, but it is a starting step in whatever the AMC and wealth management distribution activities that we want to do going forward as in Company at a strategic level.

This question clarifies the company's long-term diversification strategy into wealth management, positioning PMS as an initial step towards a comprehensive financial service provider model and reducing reliance on core broking.

Asked by Akash Sharma

3 min read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

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