Edelweiss Financial nears record high; stock up 15% in one month

The stock rallied 6% to Rs 305, trading close to its all-time high of Rs 309 recorded on November 3, 2017 on the BSE, in otherwise range-bound market on Monday

Edelweiss Financial Services rallied 6% to Rs 305, trading close to its all-time high of Rs 309 recorded on November 3, 2017 on the BSE, in otherwise range-bound market on Monday.

In past one month, the stock has outperformed the market by gaining 15% as compared to 4% rise in the S&P BSE Sensex. Since May 3, 2018, post March quarter (Q4FY18) results, the stock rallied 7% against 1% rise in the benchmark index.

Edelweiss Financial Services reported a healthy 45% growth in net profit at Rs 3.08 billion in Q4FY18 over the previous year quarter. Total revenue grew 35% at Rs 26.23 billion against Rs 19.45 billion in the corresponding quarter of previous fiscal.

Today, Edelweiss’s ‘bank-like’ breadth of businesses serve both retail and corporate customers, across credit, wealth and asset management, capital markets and insurance.

“While our performing credit and distressed credit businesses continue to do very well, we are very excited about our retail credit business, and SME lending and small ticket home loans in particular. We are also happy to report that as our wealth and asset management businesses are gaining scale, their contribution to our profits has been steadily increasing. Since these businesses do not require additional capital, this gives us enhanced profitability and a bankable source of additional internal accruals which will power our continued growth,” said Rashesh Shah, Chairman and CEO, Edelweiss Financial Services.

With around 35% of FY18 PAT contributed by franchise business (low capital consuming segment) along with rising probability for stressed asset resolutions, the overall revenue profile of the company is likely to be more granular in future, said analysts at Emkay Global Financial Services in result update.

We expect company to continue with its profitable growth trend and attain consolidated Return on Equity (RoEs) of around 18% by FY20E, the brokerage firm said with maintains BUY and price target of Rs 361.

At 12:52 pm; the stock was trading 5% higher at Rs 302 on the BSE, as compared to 0.04% decline in the S&P BSE Sensex. A combined 3.23 million shares changed hands on the counter on the BSE and NSE so far.