Brokerage houses report steep fall in profits

Our Bureau Mumbai | Updated on November 15, 2017 Published on May 25, 2012


Challenging environment, slowdown in market activity impact business

The stock market volatility in the last financial year has resulted in steep falls in the net profits of brokerages. Financial disclosures from brokerages at the end of the fiscal 2012 — all point towards a near halving of their net profits.

Take, for instance, Edelweiss Financial Services. The brokerage posted a 45-per cent decline in net profit for the year ending March 31, 2012, as compared with the year-ago period. The net profit almost halved to Rs 127 crore from Rs 233 crore. The challenging business environment, slowdown in the market activity and continued investments in its life insurance and retail businesses were reasons given by the brokerage for the fall in profits.

India Infoline's net profit for the year ending March 31, 2012, declined to Rs 136 crore from Rs 214 crore in the same period last year.

Non-equity biz

While discussing their performance in the last fiscal, brokerages felt that much of their revenue came from non-equity businesses. India Infoline commented that much of their revenue growth was from their lending business and financial products distribution. In the fourth quarter of FY12, the equities-brokerage related income saw a decline of nine per cent over the previous quarter.

Commenting on the results, Mr Nimesh Kampani, Chairman, JM Financial Group said, “The Indian capital market continues to face headwinds in the form of macro-economic concerns and global pressures which impacted investor sentiment, thereby adversely affecting our financial performance. During the quarter, we consolidated some of our businesses/ entities into one entity through amalgamation route to have better synergies and get a benefit of scale.”

JM Financial reported a net profit of Rs 121.17 crore for the year end March 31, 2012 as compared with Rs 174.56 crore for March 31, 2011.

The few initial public offerings hitting the market in the third and fourth quarter, helped some brokerages to stay afloat in the challenging market scenario.

Published on May 25, 2012
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