A few of other things –
- The company and 5paisa (promoter group company) have a pending scheme of arrangement wherein IIFLSEC will transfer its online retail accounts to 5paisa in exchange for 1 share of 5paisa for every 50 shares held. Management has repeatedly said that they want to focus on high margin traditional brokerage business and not discount broking.
- They have real estate properties which they are looking to sell. Management mentions this regularly in concalls.
My thesis is bullish on the entire brokerage industry. Rising tide (derivative volumes) will raise all boats. The sale of Sharekhan (similar in terms of market share) has given a benchmark valuation for an otherwise contracting market share business.
Cons are you don’t know what skeletons are in the closet of these legacy brokers. Recent SEBI action on IIFLSEC for activities in 2013-14 led to a sharp fall. SAT suspended the order though.
Disclosure – Invested, no buying in the last 6 months.
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