Skip to main content

Indian Brokerage Stocks

The Indian Stock Markets have come down by 40 % and the first sector to be hit are the brokerage houses. Deutsche Bank is underweight on Indian brokerage stocks Emkay, Motilal Oswal, Geojit etc, especially Indiainfoline and Edelweiss where they have recommended a SELL. Deutsche Bank compares the premium P/E at which these stocks are quoting to their peers across Asia where they are all trading at discount. This is very different from exchanges, which are also turnover-dependent but trade at market premiums since they are oligopolistic businesses.

A fragmented market, structural weaknesses such as relatively low product diversity and a distinct reversal of both the trend and the cyclical component, could lead to a significant de-rating from current above-market multiples. The sector is thinly covered by the Street; DB estimates and target price are materially below consensus.

The low market concentration and hence the propensity to intensely compete could exert significant pressure on returns. To this end, distribution prowess becomes the main value-driver and, with players such as Reliance Money taking the lead in network expansion, the crucial process of scaling up could be harder for rivals. DB expects turnover velocity to further compress in FY09E, the key retardant being the unavailability of large IPOs which have been an important driver of velocity in the past.

India Infoline is expected to report a negative growth in EPS for FY09 to Rs 5.23 [Rs 6.03 FY08] DB has a sell rating on the stock with a target price of Rs 110. [Broking/Investment banking/Wealth management/Ins distribution etc Rs 75 and Consumer Finance Rs 35.]

Edelweiss Capital is expected to report an EPS of Rs 33.83 [negative growth Rs 42.30 FY08] DB has set a target price of Rs 480 [ Broking/Investment banking/Wealth management etc Rs 265, Consumer Finance Rs 71, private Equity Rs 19 and Arbitrage Business Rs 127]

All the brokerages are awaiting the bull run to resume, and so too are the investors


Labels:

Popular posts from this blog

Historical Sensex Returns Updated - 2024

Historically Sensex has given returns of about 15% per year, despite volatility and price fluctuations of about -20% to +60%. The following table shows S&P BSE Sensex historical data - start  & close values and the yearly returns of the sensex from 2000 to 2024. So far during the year the   index has hit an all-time high of  75,124   and despite markets hitting all time highs not all stocks make all-time highs. There are many stocks still below their highs. Stocks like HDFC Bank, ITC, Asian paints are still well below their highs and some of them have given low returns over last 3-5 years. Individual or Retail investors can achieve consistent returns through investing via mutual funds , whether it be active or passive. Chasing returns from individual stocks is futile. Be a wise investor !
Read more

What is Specialized Investment Fund (SIF)

What is Specialized Investment Fund (SIF) SEBI rolls out Specialized Investment Fund with Rs.10 lakh minimum investment. What is Specialized Investment Fund? This newly launched class aims to fill the space between mutual funds and PMS, offering a flexible and specialized option for investors who are willing to make riskier bets and seek higher returns. Why the Need for SIFs? Mutual funds, by nature, attract a wide range of investors and are governed by strict regulations to ensure broad accessibility and safety. They are more suitable for conservative investors or those with a lower risk appetite.   On the flip side, PMS offers tailored strategies but typically requires a significant minimum investment (Rs.50 lakhs and above) often too large for smaller investors, and with a complexity that may seem daunting for those without deep financial expertise.  This is where the SIF comes in. SIFs are designed for those who are more informed about the market, willing to take on a hig...
Read more