The Hindu Business Line : Prime Securities to focus on commodity broking, wealth management

Prime Securities has announced its first quarter results. The company's Q1 standalone net profit is up at Rs 8.8 crore from Rs 3.1 crore. Its standalone total income is up at Rs 11.9 crore from Rs Rs 2.7 crore.

Mr N. Jayakumar, CEO of Prime Securities, says that commodities broking and wealth management would be the new focus area for the brokerage firm.

Excerpts from CNBC-TV18's exclusive interview with Mr N. Jayakumar:

We would like to know the break up of your net revenue from investment banking as well as other broking divisions?

Prime Securities is a corporate financial advisory arm and has a 100 per cent subsidiary, which is Prime Broking. So our consolidated income is now up at Rs 13.93 crore for the quarter, as compared to Rs 3.95 crore for the corresponding quarter of last year.

Our profit after tax stands at about Rs 9.1 crore compared to Rs 3 crore. In terms of the break up of Rs 14 crore, this is an extremely robust quarter that we have had. In fact, our PAT at Rs 9 crore for the quarter compares with Rs 16 for the full last year.

So essentially, the way we see this is that our corporate financial advisory business is basically a private placement and our private equity activity has been very strong, where the income has been about Rs 8.8 crore compared to Rs 2.7 crore for the same period last year. This is almost like a three fold increase.

Also, in this, the broking business has shown about a 100 per cent growth within Rs 8.84 crore. In addition, our investment income has also moved up from about Rs 1 crore for the same period last year to about Rs 5 crore.

Take us through your plans for the commodities business? Essentially, commodities broking will start off soon. We have got all our clearances in place. We are talking about August to start off.

Along with commodities, another initiative that we have triggered off, is the wealth management business, where we have hired a person from Goldman Sachs in New York. He has joined us about a month and a half ago and will be heading the wealth management business.

We have applied for our licenses, which we hope will be in place by August 15. And in September, we hope to start of the wealth management business leveraging of the high net worth base that we have and to an extent, the goodwill on the brand and the equity that we have generated over the last several years.

Do you intend to increase your retail reach and what kind of growth you hope to sustain?

Essentially, the pivots of Prime's growth will be going forward with institutional and high net worth broking. Despite the choppiness in the quarter, we had a 100 per cent topline growth and the way we see this, that business will be a key part of our growth.

It will not be retail broking the way large scale retails brokers based in the market do today, because we think our strength is going to be more focused on selling, to a combination of institutional and high net worth individuals.

In addition, the big centre of activity is the corporate finance advisory business and if growth of the kind that we have seen indicates quite clearly that we are well positioned to take advantage of increased activity in the markets.

One should remember that the advisory business is not market direction dependent. A buoyant market shows high levels of activity and we are extremely confident that given the robustness of the pipeline that we have today, the next few quarters will be equally exciting.

You did a buyback in Q4 of FY06. Keeping in light the current scenario in the markets, would you be contemplating another pickup of shares?

I think it would be improper on my part to comment on something, which is clearly a board directive.

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