Earnings Update - Geojit Financial Service (GEOFSL IN) - Robust growth continues in Mutual Fund SIP - CSEC Research

Robust growth continues in Mutual Fund SIP

- Geojit's AUM increased robustly by (38.5% YoY, 11.9% QoQ) to INR 324bn, with Depository assets (Asset under Holding) noted at INR 284bn. Book size of Mutual fund SIP has grown at a robust rate of 358% YoY and now stands at INR 0.87bn.

- Geojit's broking yields increased to 0.057% in 4QFY17 vs 0.053% in 3QFY17 driven by increase in cash yields which increased to 0.159% vs. 0.150% in 3QFY17.

- Management highlighted that about 60% of the retail volume are done via the Internet by branches (Including the mobile application).

- Consolidated total income from operations increased steadily (14.6%YoY, 5.8%QoQ) to INR 709mn. Standalone Broking & related income increased strongly (20.3%YoY, 8.2%QoQ) to INR 641mn amidst increase in yields. Consolidated other income grew by (16.5%YoY) to INR 89.9mn in 4QFY17.

- Total income from financial product (distribution of MFs) grew at a robust pace (47% YoY, 16%QoQ) to 71.4mn on the back of growth in overall MF book.

Valuation: Currently the stock is trading at 2.9x PBV of FY19E. Strengthening of the equity markets going ahead would push the volume growth and expected to bid well for the company. However, the positives are already factored in the stock price. Consequently, we rate the stock a MARKETPERFORMER and arrive at target price of INR 70, assigning a P/BV of 2.8X FY19E.

Risks: Cyclicality of broking income, muted performance of overseas subsidiaries and stiff competition from discount brokers.

Shares of GEOJIT BNP PARIBAS FINANCIAL SERVICES LTD. was last trading in BSE at Rs.79.8 as compared to the previous close of Rs. 78.3. The total number of shares traded during the day was 32729 in over 374 trades.

The stock hit an intraday high of Rs. 80.75 and intraday low of 77.5. The net turnover during the day was Rs. 2602063.

Source : Equity Bulls

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