Edelweiss Capital - Rare Wild Flower!
Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Emerging companies - Mid caps that can become large cap
Forum Discription: These are companies operating in growing markets having have certain niches or specific attributes like new sector plays. These are emerging multibaggers with high risks and high rewards.
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=1365
Printed Date: 07/May/2025 at 1:34am
Topic: Edelweiss Capital - Rare Wild Flower!
Posted By: smartcat
Subject: Edelweiss Capital - Rare Wild Flower!
Date Posted: 15/Nov/2007 at 2:44pm
While Motilal and Indiainfoline earn most of their revenues from retail sector, Edelweiss is more like an institutional brokerage and an investment banking house - a micro-Goldman Sachs if you like. The two stocks you mentioned are however trying to get into institutional brokerage business.
Edelweiss seems to be the only independent signifcant player in investment banking business, especially after JM Financial dissolved the tie-up with Morgan Stanley.
I don't think Edelweiss will get into retail broking business. I personally like Edelweiss because their research reports are extremely well written (almost as good as Motilal). And their stock recommendations/calls are very clear (Sell, Reduce, Accumulate, Buy) and fairly accurate.
Services Offered:
- Investment Banking (M&As, Private Equity, Real estate advisory etc)
- Institutional and HNI brokerage business
- Asset/Wealth Management for HNIs/corporates.
Financials:
FY05 FY06 FY07 FY08E
Revenues (Rs. Cr) 77 158 371 520
Net Profits (Rs. Cr) 22 40 109 230
Note: A significant part of income is through trading in equities. However, this should be considered as a part of its core income because that's what global investment banks like MS, GS etc excel in.
Website: http://www.edelcap.com - www.edelcap.com
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Replies:
Posted By: tigershark
Date Posted: 15/Nov/2007 at 3:04pm
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at what price is the issue priced and what will be the mkt cap and whats the equity post ipo ------------- understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things |
Posted By: aloksahi1971
Date Posted: 15/Nov/2007 at 3:19pm
| Edelwise is a fantastic play in the financial sector.They are in a niche space of institutional fianace and in case you visit the web site are into whole sale financing.This makes for risk free handsome earning. They are prety open with this regard and not as secretive as Kotak who go through different companies for this purpose. The issue is priced richly at 825 ( but the Grey market has already given it 500+ gains on listing . This is good for the long term too considering that equity investment is in the nacent stage in India and will only rise with rise in diposable income . |
Posted By: smartcat
Date Posted: 15/Nov/2007 at 3:35pm
This wholesale financing stuff is pretty cool.
Loan Against Shares of a different variety! I wonder if this will become popular.
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Posted By: deveshkayal
Date Posted: 15/Nov/2007 at 3:43pm
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Edelweiss is one of the Lead Managers for Kolte-Patil and Renaissance Jewelry IPO.
From next month, market will start pricing in FY09 numbers and Edelweiss at upper band trades at 18x on FY09E.
Since their retail exposure is small, margins are high.
Rasesh Shah also fits into the Basantji's critieria of IIM-A. Rasesh , Sanjeev of Info Edge and Subhiksha MD are all part of the same batch !!
Edelweiss can compared to India Infoline which is trading at higher multiples on FY09. Less competition in institutional broking space.
Disclosure: I am planning to apply for IPO. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: aloksahi1971
Date Posted: 15/Nov/2007 at 3:47pm
| Placing a calculated bet on exsisting promoters to expand business is a part of their work they have capability to analyse the future growth . banks are more interested in the recovery of their assets and interest rathar than expantion and all. |
Posted By: deveshkayal
Date Posted: 15/Nov/2007 at 4:01pm
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Market Cap: India Infoline - 6410 crs
Indiabulls - 17774 crs
JM Financial - 7489 crs
Motilal Oswal - 4875 crs ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: MuKeShHaRlAlKa
Date Posted: 15/Nov/2007 at 4:49pm
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the issue size is 690 crores at upper band of 825/share
this works out to be a market-cap of 6900 crore considering its grey market premium of Rs 850 if the share lists at Rs 1700 then market cap would be around 15000 crore is this valuation justified? ------------- In Cricket & Stock Markets, everyone seems to be an expert but only a few really are. |
Posted By: aloksahi1971
Date Posted: 15/Nov/2007 at 4:59pm
| Justification is there for the rich valuation set by the company,not for that set by the punters.But who are we when in these times RPL has valuation of more than Infosys and Rakesh Junjunwala seems to be humbled by this market exuberance!!! |
Posted By: MuKeShHaRlAlKa
Date Posted: 15/Nov/2007 at 5:51pm
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since the issue size is not a large one so the FIIs and Institutions will get very less allotment. So they would try to mopup the shares at the day of listing.
Crisil has rated this ipo a grade of 4 out of 5. This would be a blockbuster of an ipo ------------- In Cricket & Stock Markets, everyone seems to be an expert but only a few really are. |
Posted By: deveshkayal
Date Posted: 15/Nov/2007 at 6:48pm
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Very Useful Information.MUST READ
Edelweiss Capital president and co-head-institutional equities Naresh Kothari in conversation with ET . Excerpts:
Where do you think is the institutional broking space currently placed in India, in terms of revenue, players, size and entry barriers?
In terms of revenue, the overall commission market is about $500-800 million. There are about 10-12 large international players and about 7-8 large domestic players who together form about 80% of the market. Currently, there are quite a few significant entry barriers and, therefore, not many new entrants. The biggest entry barrier is definitely in terms of a large research platform. I don't think it is easy to build scale in this business. Second, is establishing a network. These two form the business' core. How has brokerage rates changed? Have they fallen in line with retail broking or is there a difference in this segment? On the institutional side, there is a large element of fixed cost that we incur and I don't think that the rates will come down drastically. There is always pressure on commission, but I think the volume growth has made up for it. The volumes in the cash market have gone up significantly. Overall, I think the commission pie has not reduced because of that. There has been a lot of action with many a player looking to enter the business in a big way. In such a scenario, where do you place yourself and what is the major competition that you will face? We expect competition to continue and intensify in the future. However, opportunity in India is fairly widespread. India has anywhere between 800-1,000 companies, out of the 4000-odd listed companies, which are of investment grade. On the other side, we have about 2,000-2,500 institutional investors. You can clearly see that market opportunity cannot be restricted to just 5-10 players. As of March 31, 2007, we had over 150 institutional investors actively doing business with us and approximately 135 professionals in our institutional equities business. Funds are being raised within India and abroad for investment here. How do you think this will benefit the institutional broking space in India? The total AUMs are going up substantially in India every year. This is why the institutional broking business looks very attractive to players. This is going to continue as opportunities keeps growing. Unlike putting up a steel plant or a manufacturing unit, this space is very easy to enter. ---------------------------------------
One more on Investment Banking For instance, a firm like Merill Lynch will have a cut-off fee for an IPO of at least $2 million, this means it can work only on IPOs of more than Rs 1,000 crores. Even Citibank and UBS, who are doing small IPOs for market penetration, may not pursue it in the long run. Even for M&A transactions, global banks cannot compete for mid-sized deals. Mr Khanna, says, "If its a cross-border transaction and the deal has come from India its difficult to excite the overseas offices in a global bank. The deal has to be worth $2 billion to $3 billion for them to find it worthwhile. How many such deals are there in India." The maximum number of overseas acquisition by Indian firms fall in the $100 million to $500 million-range. This is the area that Indian investment banking firms plan to play. (ET) ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: deveshkayal
Date Posted: 15/Nov/2007 at 6:53pm
Slight correction, market cap will be 6200crs. Edel Cap deserves premium valuation bcoz of high margins. Yes, if it list at 15000 crs, it will be expensive. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: xbox
Date Posted: 15/Nov/2007 at 4:36am
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Remember people made more money in DLF than Vishal retail at IPO. People could make little money from this IPO as allotment size will be very small. Listing of Edelweiss Capital will re-rate some of listed brokers. Real money will be made in listed space. Play has already started. Market is quite excited on this space. ------------- Don't bet on pig after all bull & bear in circle. |
Posted By: MuKeShHaRlAlKa
Date Posted: 15/Nov/2007 at 10:51am
yes u r right Indiabulls has already run up to 800 and IndiaInfoline has also crossed the 1100 mark. Religare listing will also have a positive impact on listed brokerage cos. ------------- In Cricket & Stock Markets, everyone seems to be an expert but only a few really are. |
Posted By: smartcat
Date Posted: 15/Nov/2007 at 11:15am
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Real money will be made by holding on to Edelweiss for a few years - even after buying at listing price. The price at which Edelweiss would list will not affect my decision to buy the stock - it will only affect the amount of investment.
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Posted By: deveshkayal
Date Posted: 15/Nov/2007 at 11:34am
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After listing, i feel "Good business at a good price" wont remain. Good thing is that they priced the issue at 825 bcoz for most retail investors 20 Rs stock is cheaper than Rs 100 stock! ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: MPD05
Date Posted: 16/Nov/2007 at 3:59pm
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Here is my two cents worth! I've been following this company right from day 1 and have occasionally done business with them over the years. The management has good vision and is excellent in execution. The top management team has been together for a long time. They seem to have borrowed Nararyan Murthy's play book. Like Infy and unlike most other firms, they have been very generous in sharing their wealth with their employees. Employees (excluding poromoters) will own almost 20% of post issue capital! Another similarity with Infy is their culture. Just like Infy, they have managed to create a different organization spirit and culture. You can feel the difference when you interact with them. It is not just another investment bank. Another characteristic that sets them apart from other financial services firms is their reliance on proprietary and arbitrage driven trading. Here they seem to have modeled themselves consciously after Goldman Sachs. Their research driven, arbitrage/pro trading really sets them apart. No other Indian bank even comes close. As has been pointed out by other readers, they have been concetrating on high margin Institutional business, besides pro trading. Other verticals like AMC, private banking, etc. are just becoming functional and are likely to contribute more as we go along. In addition, given their business strategy, I won't be surprised if they enter the banking space within the next 12 to 18 months (through acquisition). They have a well known set of FIIs as investors ... Lehman, Galleon and a couple of ex-Goldman partners. FIIs will own 32% of their post issue capital. As far as I can gather, none of them is ready to cash out yet. Bottom line will grow by 100% in FY08, probably 80% in FY 09, and around 50% for a couple of years after that. These are purely my guesstimates based on my own research. In short, it has all the makings of a successful financial services company. The IPO price is attractive. However, given the current euphoria in the market, the listing could be any where between Rs.1600 - 1800. |
Posted By: stockaddict
Date Posted: 16/Nov/2007 at 4:02pm
Edelweiss is a good issue, so was religare and Mundra but the problem with all such issues is that due to very high subscription you hardly get any allottment an end up blocking money for a month or so.
And when they list at 2-3 times the issue price one doesn not know whether to invest or not. I have also observed with many issues that after the initial euphoria dies they all come down significantly, some even fall close to or below IPO rates.
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Posted By: Ajith
Date Posted: 16/Nov/2007 at 4:49pm
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Really unfortunate that hype (given the comparisons with market cap of Goldman Sachs and others that will come)will rule on listing....else would have been a great buy on listing.....may still be! ------------- Ajith |
Posted By: deveshkayal
Date Posted: 16/Nov/2007 at 8:38pm
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Investors will earn 6.2% in three weeks assuming Edel list at 1600 and allotment is 8 shares (minimum lot) where investors have applied for maximum lot. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: tigershark
Date Posted: 16/Nov/2007 at 9:03pm
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great management, great co, great work culture everything may be true but in the stock market evrything comes at a price and at a certain value.many a times we have ended up buying a great co at the wrong price ------------- understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things |
Posted By: Ajith
Date Posted: 16/Nov/2007 at 9:22pm
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Its OK for small investors to try their luck in the IPO but there is too much attention (and cosequent hype) on an admitedly great company to get it at a bargain on listing unlike say an Infoedge.But one must value it correctly and buy on a fall. ------------- Ajith |
Posted By: deveshkayal
Date Posted: 18/Nov/2007 at 11:02pm
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Edelweiss founders Rashesh Shah, now 41, and Venkat Ramaswamy pair pooled $250,000 they'd collected from their families and while working together at Icici Bank and founded Edelweiss. Edelweiss has lost none of its 16 senior managers in the last five years.(CNN)
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From 1cr to 10,000 crs valuation is just too good for the promoters. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: deveshkayal
Date Posted: 20/Nov/2007 at 6:10pm
Oversubscribed 110 times
Retail - 12 times  ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: chic_1978
Date Posted: 20/Nov/2007 at 6:28pm
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Oversubscribed 110 times
Retail - 12 times
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Retail - 12 times......so they will get better allotment than HNI
Grey market premium is 825 + 590 = 1415.
then why u shedding tears ??? ------------- happy & wise investing |
Posted By: PrashantK
Date Posted: 20/Nov/2007 at 6:39pm
Retail-- 16 Times now !!! 
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Posted By: India_Bull
Date Posted: 20/Nov/2007 at 6:42pm
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I too have applied to it guessed , retail public will not apply looking at religare experience but alas !! By the time final figures come in it shd be around 30 times in Retail.
------------- India_Bull forever Bull ! www.kapilcomedynights.com |
Posted By: deveshkayal
Date Posted: 20/Nov/2007 at 8:09pm
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Grey market premium is 825 + 590 = 1415.
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Its around 1600 or more !! ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: xbox
Date Posted: 20/Nov/2007 at 4:30am
Biggest money ------------- Don't bet on pig after all bull & bear in circle. |
Posted By: smartcat
Date Posted: 20/Nov/2007 at 11:05am
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Edelweiss, Edelweiss Blossom of snow may you bloom and grow Edelweiss, Edelweiss (inspired by Edelweiss song from the Hollywood Classic 'Sound of Music')
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Posted By: deveshkayal
Date Posted: 21/Nov/2007 at 12:13pm
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Wow, I will be happy to see this happen even if I don't own or plan to own a single stock.
Biggest money
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Yes, but smaller players like India Infoline, MOST will be re-rated in terms of market cap. I am not so sure about Indiabulls bcoz its already trading at 18000 crs. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: kulman
Date Posted: 21/Nov/2007 at 5:53pm
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Edelweiss, Edelweiss Every morning you greet me Small and white, clean and bright You look happy to be listed ---------------------------------
 Good one! For those who haven't seen all-time classic "Sound of Music", it's a MUST WATCH with great music & songs.
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: smartcat
Date Posted: 21/Nov/2007 at 6:02pm
| Not to forget War and Nazis. What a Guns N Roses combination. Kya nahi hain iss movie mein.. songs, comedy, music, action, romance, children, tragedy, jilted love, hope, betrayal and power! |
Posted By: kulman
Date Posted: 21/Nov/2007 at 6:49pm
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You're absolutely right.
Chris Plummer as Captain & Julie Andrews as Maria are simply great. And that escape sequence...."Climb Every Mountain...ford every stream..."
Having said that with this ongoing correction, one recalls that duet song..."I'm sixteen... going on Seventeen.....". It would be nice to see even lower levels.
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: India_Bull
Date Posted: 04/Dec/2007 at 4:13am
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Edelweiss allotment is out, those applied can check at http://www.intimespectrum.com/site/display_application.asp ------------- India_Bull forever Bull ! www.kapilcomedynights.com |
Posted By: deveshkayal
Date Posted: 04/Dec/2007 at 10:09am
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Thanks Sandeep jee !
Those who had applied for maximum lot had been alloted 8 shares. I am thinking of selling out on listing and deploying the same in Yes Bank bcoz i cannot increase my exposure at 15k market cap. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: chic_1978
Date Posted: 04/Dec/2007 at 10:11am
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hi devesh ne idea when is the listing & wot price r u expecting to list....i feel around 1600/ +
------------- happy & wise investing |
Posted By: deveshkayal
Date Posted: 04/Dec/2007 at 10:14am
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Normally a company lists on the bourses within 1 week after the allotment. My expectation of listing price is the same as yours. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: smartcat
Date Posted: 04/Dec/2007 at 11:04am
I will buy those 8 shares from you.
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Posted By: furkanalam
Date Posted: 05/Dec/2007 at 3:39pm
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Been alloted 8 shares.....
Thinking of buying more later.... Great company with excellent management.....Good bet for long term investors..... |
Posted By: kulman
Date Posted: 05/Dec/2007 at 3:45pm
I will buy those 8 shares from you.
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m/s SmartCat & Devesh....
please take due care & keep the exchanges informed of this block-deal to avoid any SEBI enquiry.
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: smartcat
Date Posted: 05/Dec/2007 at 3:50pm
Will do 
When is Edelweiss expected be listed?
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Posted By: PrashantS
Date Posted: 05/Dec/2007 at 4:17pm
| i think this friday .but please someone confirm it |
Posted By: aloksahi1971
Date Posted: 05/Dec/2007 at 5:05pm
| What |
Posted By: aloksahi1971
Date Posted: 05/Dec/2007 at 5:12pm
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What is the long term story here .I have taken a good exposure to both Religare(956) and Edelwise(390).I have been moved to do this due to Mr Chidambrams comment on the future of the Financial Sector.My cost of aquiring is higher than the IPO price due to interest component.
Though I have been desapointed by Religare which in my opinion should have listed at 800.I guess with listing of Edelwise all the brokerage stocks could go up MOST already up.
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Posted By: smartcat
Date Posted: 05/Dec/2007 at 5:41pm
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http://www2.goldmansachs.com/ - This is the long-term story .
But of course, that looks incredulous right now. Before you plan any new purchases, wait for the listing to happen. You will get to know more about the company's future business plans, earnings estimates etc through the post-listing management interviews.
Wait for 1 or 2 more months and some foreign/Indian brokerage will definitely cover this stock. Since these brokerages have access to the management, you can get a decent idea about Edelweiss' long term story.
As of now, the only insight one could get is through the company's website.
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Posted By: basant
Date Posted: 05/Dec/2007 at 8:21pm
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Is there any part of the business vertical that Edelweiss does not do when compared to GS or are they into alll the verticals?
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: smartcat
Date Posted: 05/Dec/2007 at 11:11pm
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GS is supposed to be big in US Treasury bond trading. And GS is so big, they act as financial advisors to countries/governments! |
Posted By: furkanalam
Date Posted: 07/Dec/2007 at 3:32pm
| When is it listing???.... |
Posted By: chic_1978
Date Posted: 07/Dec/2007 at 4:47pm
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on monday
------------- happy & wise investing |
Posted By: Ajith
Date Posted: 07/Dec/2007 at 4:49pm
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If Edelweiss gets a banking license.......that too will be added to the valuation.
------------- Ajith |
Posted By: chic_1978
Date Posted: 07/Dec/2007 at 4:55pm
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ok guys
can we guess the listing price
i guess it will list @ 1500/= & close @ 1750/= (just wild guess)
------------- happy & wise investing |
Posted By: smartcat
Date Posted: 07/Dec/2007 at 4:59pm
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Maybe, but not every company wants to open a bank!
Another company with Edelweiss business model is Enam. And Nomura baulked at Enam's price tag of $500 million. Enam guys would be closely watching the Edelweiss listing, and I'm pretty sure they are salivating right now.
Expect an IPO of Enam soon. |
Posted By: Ajith
Date Posted: 07/Dec/2007 at 5:17pm
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I just remember reading that Edelweiss may think of getting into banking. ------------- Ajith |
Posted By: deveshkayal
Date Posted: 07/Dec/2007 at 5:52pm
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Edelweiss is listing on Wednesday , not on Monday. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: furkanalam
Date Posted: 10/Dec/2007 at 6:33pm
One More day to go.....Waiting for Wednesday listing...
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Posted By: deveshkayal
Date Posted: 11/Dec/2007 at 9:41am
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Disappointing listing. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: basant
Date Posted: 11/Dec/2007 at 10:40am
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Investors looking to buy should be excited. Smartcat any block deals that you exceuted on this one today? ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Mohan
Date Posted: 11/Dec/2007 at 11:02am
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Basantji, You feel its a good investment ? What kind of CAGR in Earnings can one expect ? ------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: smartcat
Date Posted: 11/Dec/2007 at 11:23am
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Devesh bhai is refusing to sell because of 'disappointing' listing. I need to look for another bakra now.
Not sure about valuations right now - so I'm keeping Edelweiss (another joker stock) at 1% of my portfolio.
Remember that a large part of Edelweiss' income is through trading gains. That's why it would be difficult to estimate CAGR earnings. Edelweiss seems to have doubled its earnings every year in the past 3 years.
Like the Mutual fund ads on TV (read it fast) -
Investment gains in Edelweiss is subjected to market risks. Please keep your eyes open and invest carefully. Past performance may not be sustained in the future.
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Posted By: basant
Date Posted: 11/Dec/2007 at 11:43am
1% exposure would require a 100 bagger to double the portfolio. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: smartcat
Date Posted: 12/Dec/2007 at 12:01pm
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But when Edelweiss joins hands with my 5 other 1% stocks and if each becomes a doubler or a tripler, it can shake up the portfolio. That's a lot of iffs and buts, but remember the old Doordarshan song Ek Chidiya, Anek Chidiya.
I like Edelweiss not because of the returns it can generate, but because of their business model. It is the only significant independent intitutional brokerage house and investment banking company (along with Enam). Businesses like Religare, Motilal, Geojit etc are somewhat boring.
Edelweiss becoming a 10-bagger is a possibility (not sure about time frame though) .
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Posted By: deveshkayal
Date Posted: 12/Dec/2007 at 12:17pm
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Devesh bhai is refusing to sell because of 'disappointing' listing. I need to look for another bakra now.
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Thank God i didn't sell !!! ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: deveshkayal
Date Posted: 12/Dec/2007 at 12:22pm
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Brokerage stocks should only be bought during correction !!
Edelweiss should do an EPS of 45 in FY09. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: MPD05
Date Posted: 12/Dec/2007 at 3:15pm
I know this company well. Yes, it is true a significant part of their earnings is generated through prop trading. However, it is not correct to say that they take a lot of market risk. A majority of Edelweiss' trading portfolio is "arbitrage trading" and they take very little, almost zero directional risk on the market. They have developed sophisticated trading models. In fact, among Indian houses they are unique in developing non-directional prop trading strategies a la major US houses like Goldman. |
Posted By: smartcat
Date Posted: 12/Dec/2007 at 3:25pm
| Do you have any idea about how this arbitrage trading results in such huge gains? I don't think it is like http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=2637 - JM Equity & Derivative Fund type of arbitrage trading - because they hardly give 8% annual returns. |
Posted By: smartcat
Date Posted: 12/Dec/2007 at 4:00pm
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Looks like Edelweiss is not modelled exactly after GS after all.
http://www.moneycontrol.com/india/news/ipo-new-listings/mf-biz-to-kick-off-in-q1cy08:-edelweiss-cap/316932 - MF biz to kick off in Q1CY08
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Posted By: smartcat
Date Posted: 12/Dec/2007 at 4:21pm
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Goldman Sachs has been referred to as Wall Street's 'Secret Society' - because nobody really knows what they exactly do or how they generate so much profits.
I guess Edelweiss could be Dalaal Street's Secret Society with all these 'secret' arbitrage strategies.
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Posted By: furkanalam
Date Posted: 12/Dec/2007 at 5:09pm
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Goldman Sachs has a market cap of $90 billion...
Edelweiss has a market cap of around $3 - 4 billion...
Both have very similar models....So lets hope Edelweiss can become even half as big as Golman Sachs as India progresses from developing economy to Developed Economy.....
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Posted By: vishal.sahay
Date Posted: 12/Dec/2007 at 7:51pm
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Bulk Deal on Edel: NSE: 12-Dec-07 EDELWEISS Edelweiss Capital Limited FID FUND MAURITIUS LTD BUY 982000 1535.78 BSE: 12/12/2007 532922 EDELWEISS CA FID FUND MAURITIUS LTD B 564276 1534.57 I hope Edelweiss keeps up the expectations that investors are building into its price. Disclosure: I am holding my IPO allotment shares
------------- Vishal |
Posted By: deveshkayal
Date Posted: 12/Dec/2007 at 8:05pm
Interesting !
I think Edelweiss will trade at a premium to India Infoline bcoz of better margins. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: basant
Date Posted: 12/Dec/2007 at 8:23pm
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At first shot it does not look too expensive at 25 times fy 09 I am not buying because i cannot bet significantly but it does seem ok when compared to its peer group. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Vamsee
Date Posted: 12/Dec/2007 at 8:45pm
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Guys. Go easy on comparisons with GS. GS is like an octopus with its tentacles spread far and deep. It has more than 100 years of experience. The current treasury secretary of US is ex GS CEO. Today when major financial companies in US are in deep s#it because of sub prime mess, GS guys actually *made* lots of money from this mess. They are the savviest guys over here. I am not saying all this to sound negative about Edelweiss. We should not be blinded by these sorts of comparisons. It tends to cloud our objectivity. The real strength or weakness of this company would be known *after* it has gone through couple of market crashes/recessions. |
Posted By: MPD05
Date Posted: 12/Dec/2007 at 10:16pm
I wholeheartedly agree with your observations on Goldman. There is only one Goldman in this world and it has a unique, successful culture on Wall Street. I don't quite know how they do it, but they are always one step ahead of the rest of the Street! No one is suggesting Edelweiss is Goldman Sachs!! However, there is no harm in acknowledging known similarities. For instance, those of us who were lucky enough to spot Infy in mid nineties and hang on to it for a decade, it was apparent from day one that it was a "different company" and Narayana Murthy was no run of the mill CEO. It was also obvious that some of Infy's culture and policies (starting with the academic institution like campus to liberal wealth sharing through ESOPs, no debt policy, maintaining huge cash balances, etc...) were direct influences of Microsoft. Murthy himself has acknowledged in several interviews that they deliberately adopted some aspects of Microsoft. In the same vein, Edelweiss has tried to emulate Goldman in some aspects of its business model; this is especially true as it concerns prop trading. In fact, for those of us who are familiar with Goldman's research reports, it is quite apparent that even Edelweiss' research report formats are modeled after those of Goldman's! Talking about Infy, it is also apparent that some of Edelweiss' policies seem to be heavily influenced by Infy. Their vision statement and their liberal sharing of wealth with employees are two things that come to mind immediately. Your point is well taken that Edelweiss is no Goldman Sachs. However, they have made a good beginning and if they are even one quarter as successful as Goldman has been, we would all be a lot richer!! |
Posted By: India_Bull
Date Posted: 12/Dec/2007 at 10:28pm
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I liked the interview on moneycontrol specially the part where he avoided the question abt numbers else you will see the company head discusses the bottomline and topline numbers and tell shareholders what is going to be the price !! Just converted some religare to Edelweiss..... ------------- India_Bull forever Bull ! www.kapilcomedynights.com |
Posted By: Ajith
Date Posted: 12/Dec/2007 at 10:29pm
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I think Edelweiss will succeed in attracting the best talent and that can prove critical for future growth.
------------- Ajith |
Posted By: smartcat
Date Posted: 12/Dec/2007 at 10:30pm
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Vamsee, thanks for walking in and pricking the bubble I had created on Edelweiss.
But seriously speaking, yes, we are only comparing business models of two companies - one very successful mysterious global company and another one which seems to be India's only GS clone.
MPD - those arbitrage strategies you mentioned, do you thin it is people dependent or process/methodology dependent? Edelweiss might be doing well with their arbitrage models right now, but what will happen to the company if the top executives quit?
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Posted By: MPD05
Date Posted: 13/Dec/2007 at 9:36pm
Smartcatji, People are always important but the more critical factor is the processes. Once they have the processes in place, they should be able to train their recruits. As for any of the key senior guys leaving, it is unlikely in the medium term since Edelweiss has a generous employee equity participation program and these employees are likely to have a lot of valuable, yet to be vested, equity in the company. MPD05 |
Posted By: basant
Date Posted: 13/Dec/2007 at 10:02pm
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Two questions:
1) is Edelweiss a 50pc plus grower for the next 3 years 2) What is the likely EPS for fy 09 my casual estimate indicates at Rs 60 per share.Is this aggressive? What are the brokerages indicating if at all? ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: smartcat
Date Posted: 13/Dec/2007 at 11:20pm
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The problem with buying a brokerage stock is that getting an EPS growth estimate is difficult - because no brokerage wants to cover it. I guess it looks odd putting a BUY call on your competitor.
I don't know about the EPS growth estimates, but I expect a 30 - 40% CAGR growth in the stock price from these levels over the next 3 years.
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Posted By: Ajith
Date Posted: 13/Dec/2007 at 8:06am
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I do not quite understand. What is the reason for the high market cap? Will the ROE be very high? Apart from arbitrage will they be trading in equities/holding long-term investments? Can it be comparable with Reliance Capital for long-term? Or I will just buy some shares at some point and wait for the answers in due course as the 'third wave' of BFSI runs its course. ------------- Ajith |
Posted By: basant
Date Posted: 13/Dec/2007 at 9:04am
Is it worth a bet for a 40% grower that is tied to the stock market for at least 60% of its income. I was expecting a 50%-60% kind of a grower. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Ajith
Date Posted: 13/Dec/2007 at 9:28am
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Without growth of at least 60 percent in the coming 3 years the current price will be difficult to sustain.
------------- Ajith |
Posted By: deveshkayal
Date Posted: 13/Dec/2007 at 9:30am
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At this price/market cap, i am not comfortable buying Edelweiss. Having said that, it has been growing at 100% in the past three years. Since, new shares were issued in the IPO, the growth will slow down to 70% i guess.
Whats good news for the institutional broking is that many foreign financial institutions are setting up AMC's and the Life Insurance business here and the P-notes issue, so research reports will be in demand and FII's will invest through brokerage like Edelweiss.
Your EPS of 60 is aggressive. I expect it at around 45 for FY09. In short if the price comes to 1300, then its a great business to own. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: deveshkayal
Date Posted: 13/Dec/2007 at 9:55am
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"We follow the Infosys style of functioning, with an independent board and I report to it"
"wants the company to be identified as a full-fledged investment bank rather than a brokerage house. "
So, is he planning to get into banking? “We have not planned anything. But we will continue to use the same business model — step into adjacent spaces and constantly spot new themes,” he adds
Read the full article http://www.business-standard.com/common/storypage.php?autono=307482&leftnm=5&subLeft=0&chkFlg= - here ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: basant
Date Posted: 13/Dec/2007 at 10:41am
Ok at Rs 1300 it will be about 28 times Fy 09 for a fast grower does not seem very expensive and 1300 is only 10% down from present levels so that should not be astruggle for someone willing to hold it for 3 years.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: smartcat
Date Posted: 13/Dec/2007 at 11:12am
From the interview -
This is what I like about Edelweiss.
The 30 - 40% CAGR growth in stock price is just my estimation & expectation. If I could justify high 60% growth, I would have put more money in this stock. I guess I'm waiting for the 'story to unfold'.
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Posted By: kulman
Date Posted: 13/Dec/2007 at 11:18am
Is it another term in Bizlish* for 'pan out', 'roll out', 'going forward'?
*Bizlish= business english used mainly by analysts.
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: Ajith
Date Posted: 14/Dec/2007 at 12:42pm
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This is another of the entrepreneurial kind of stocks one can bet on.Here ,its a great industry unlike MindTree where there are question marks about profitablity. Ultimately one has to wait for the story to unfold-yes. ------------- Ajith |
Posted By: deveshkayal
Date Posted: 14/Dec/2007 at 12:57pm
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Slight correction: Edelweiss could end FY09 with an EPS of 48 and if we assume a PE of 35, then target price comes to 1680 which might be achieved in the next 6 months. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: aloksahi1971
Date Posted: 14/Dec/2007 at 4:42pm
| At present every body is doing a Brokerage firm.Religare is from the Pharma people but Edelwise is at lest a firm that has total commitment to the Securities business.They have modeled themselves well,Systems are great.They could well take the mantel from Mr Uday Kotak!!! |
Posted By: MPD05
Date Posted: 14/Dec/2007 at 6:22pm
Based on my own research and conversations, I expect them to grow the bottom line at 100% in FY08, around 80% in FY09, and around 55% in FY10. Assuming no further dilution of equity, this translates to an EPS of 30, 54, and 81 in FY08, 09 and 10. Currently, only three of their verticals are contributing. Over the next couple of years, all their verticals will be functional. Another unrelated upside could be a take over. I heard one of the global majors tried to buy them out 6 months before the IPO but the promoters did't want to sell. Good for them! |
Posted By: basant
Date Posted: 14/Dec/2007 at 7:29pm
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Is the slackening growth because you have been conservative or something else I find that new verticals should help sustain mkt cap and profits ~ with a lag. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: MPD05
Date Posted: 14/Dec/2007 at 10:49pm
The numbers I hear from company quarters are 80-90% for FY09 and 70-80% for FY10. However, if you look at FYO7, they did a bottom line of 109 crores, which implies FY08 expectation is around 220 crores. Taking a 80% growth, it implies 396 crores in FY09. To be conservative, I thought it is best to assume that they would add another 200-220 crores in FY10, which translates to a 55% growth. You are right, new verticals should aid growth with a lag. At the same time, they have to prove their execution skills in these new verticals as yet. I hear that informed parties will be ready to buy this stock, with a two year view, at around 1250 per share. |
Posted By: deveshkayal
Date Posted: 15/Dec/2007 at 3:52pm
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I think you have not considered MF business which will start in Q4FY08 in your EPS estimates bcoz if you see UTI AMC which had an AUM of around 40k crs in FY07 did a profit of just 150 crs. UTI AMC is the most profitable even ahead of Rel AMC. Thats why i tone down my estimates to 48. AMCs turn profitable only when they reach a certain AUMs which i cant remember. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: s_praharaj
Date Posted: 16/Dec/2007 at 9:08pm
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I was reading a few of the research reports by Edelweiss.
The reports are scientific and well structured.
However this is one company we must keep an eye.
I don't have much idea about the company.
The RHP, they must have filed for their public Issue will definitely be of much help. ------------- Shashi Praharaj |
Posted By: xbox
Date Posted: 16/Dec/2007 at 4:27am
------------- Don't bet on pig after all bull & bear in circle. |
Posted By: deveshkayal
Date Posted: 16/Dec/2007 at 11:04am
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Edelweiss Securities holds 1.39% stake in Spentex Industries. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: aloksahi1971
Date Posted: 16/Dec/2007 at 11:35am
| There is a report about edelwise in the e conomic times supliment today.A question I want to know is : Do multi baggers happen at a low cost i.e in the stock price range of sub Rs 500 because it must be giving people the jitters to buy stocks at > Rs 2000. |
Posted By: smartcat
Date Posted: 16/Dec/2007 at 11:49am
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Multi-baggers happen for stocks with low market-caps, not price.
But you don't need multi-baggers to make money in the stock markets.
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