Navin Agarwal, MD of the co addressed the call:Highlights by Capital Mkt
The company has posted 51% jump in consolidated revenues to Rs 2.7 billion in Q2FY16, while consolidated PAT moved up 33% to Rs 43.4 crore.Balance sheet had networth of Rs 13.9 billion and gross borrowings of Rs 15.8 billion at end September 2015.Borrowings ex Aspire Housing Finance stands at Rs 7.3 billion end September 2015.
Broking and related revenues
In Q2FY16, overall cash market volumes were flat QoQ and up a marginal 2% YoY. Within this, retail cash volumes were down 4% YoY, while institution cash volumes were up 13% YoY.
The company has invested significantly into advisory and sales teams, distribution network and technology offerings.The company has started real estate broking and advisory service under MOSL.Equity market share was 1.8% in Q2FY16 (1.8% in Q1FY16 and 1.5% in Q2FY15), with improved market share in the cash segment on both QoQ and YoY basis, including the high-yield delivery segment.Given the improvement in cash business, blended yield increased from 3.4 bps in Q1FY16 to 3.7 bps in Q2FY16.Branch count is up 23% YoY and DP assets are up 27% YoY.The monthly runrate in retail client addition in H1FY16 was 2X of the FY14 average, and 1.2X of the FY15 average.The company is revamping its digital initiatives across delivery and engagement touch-points, to reduce the cost of servicing clients.
Wealth management business:The business managed assets of Rs 50.3 billion, showing a growth of 59% over previous year.
The team had 64 sales people as of September 2015, up 35% YoY.
Investment banking:Investment banking fees were Rs 73 million in Q2FY16, up 49% QoQ.
The company was involved in the IPOs of Pennar Engineered Systems and Powermech Projects during this quarter, as well as in the upcoming IPO of Parag Foods.The company is in advanced stages of closure in a couple of mandates in the M&A and private equity raising side
Traditional capital markets contributed 52% of total revenues this quarter, as compared to 67% a year ago
Asset Management:Asset Management fee were Rs 575 million in Q2FY16, up 43% QoQ and up 169% YoY.Total AUM/AUA across mutual funds, PMS and PE businesses was Rs 113.5 billion, which is up 2X on a YoY basis.Mutual fund AUM was Rs 43.1 billion, up 236% YoY, PMS AUM was Rs 48.3 billion, up 123% YoY and PE AUA was Rs 22.0 billion, up 10% YoY.Net inflows this quarter were up 4.5X on a YoY basis, from Rs 5 billion in Q2FY15 to Rs 21 billion in Q2FY16.This traction in net sales has been driven by investment performance, new distributor relationships across channels, as well as scaling up of the existing distributor relationships.The company ranked #14 in the industry in terms of PMS and mutual fund AUM as of Sep 2015, up from #18 in Mar 2014.In the private equity business, the 1st growth capital fund saw 2 partial exits this quarter. The fund is likely to exit by FY17. The company is expected to earn meaningful carry as well profits on Sponsor commitments in FY17.
Asset management segment (public market equities and private equity together) contributed 21% of total revenues this quarter, as compared to 12% a year ago. The company expects asset management contribution to revenue to continue to improve.
Housing Finance:Housing Finance related income was Rs 457 million in Q2FY16, up 121% QoQ.During the quarter, Rs 5.7 billion were sanctioned and Rs 4.4 billion were disbursed. The disbursements during Q2FY16 were 2X of each of the previous two quarters.
The HFC loan book stood at Rs 9.9 billion across 9,700 accounts, as of Sep 2015. These are pure retail housing loans, with an average ticket size of Rs 1.0 million.Distribution reach expanded to 37 branches across 4 states.
Cumulative disbursements have crossed Rs 10 billion after 5 full quarters of commencing operations. As of now, Maharashtra and Gujarat are 89% besides small presence in MP and Telangana.Yield stands at 13.5%, NIM is 300 bps, GNPL is 0.04%, Cost to income ratio is 39%, RoA is 3.8% and RoE 14%.The company proposes to improve the loan book to Rs 2000 crore end March 2016, while expects PAT of Rs 35-40 crore for FY2016.The company proposes to improve housing finance RoE to 20%, by raising the debt-equity ratio to 8-9 times.
Aspire has sanctioned lines of credit of Rs 14.1 billion, through a mix of long-term bank loans, non-convertible debentures and commercial papers.Equity commitment is Rs 2 billion, as of Sep 2015.Fund based activities:This include strategic allocation of capital to long term RoE enhancing opportunities like Aspire Home Finance, sponsor commitments to mutual fund and private equity funds of MOFSL, apart from the NBFC loan bookFund based income was Rs 261 million in Q2FY16, down 8% QoQ and down 23% YoY.NBFC loan book was Rs 3.3 billion. The NBFC lending business is now being run as a spread business with a healthy mix of short term and long term borrowings.The total borrowings in MOFSL (ex Aspire) stood at Rs 7.3 billion as of Sep 2015 resulting in incremental interest cost (ex Aspire) of approx Rs 6.0 million as compared to previous quarter and Rs 111.7 million as compared to same quarter of the previous year.Investment in own mutual fund products is Rs 5.7 billion (at cost) and Rs 1.7 billion (at cost) in own private equity products.The unrealized gain on MF investments was Rs 1.7 billion, as of Sep 2015. The same is not reflected in the profit and loss account for the year
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