HDFC Securities, the flagship company of HDFC Group has come up with the first-quarter results.
In the first quarter i.e. June 2020, HDFC Securities has clocked revenue of 272 crores; it was only 182 crores last year in the same period. This has translated into a massive 50% growth in revenue. Total expenses have also gone up to 100 crores as compared to 83 crores last year in the same period.
The main expense of Broking Company is employee salaries, for HDFC Securities it accounted for 50% of total expense in the first quarter for FY20-21. The PAT has also doubled to 129 crores as compared to just 66 crores last year.
During the quarter, the Company had declared and paid an interim dividend of Rs 56 per share.
Euphoria in the market
If we see the market stats carefully during April-June 2020, retail investors have participated in big-time as a trader and investor, both. The WFH has given a lot of retail investors a time to invest in the market. Mr. Ramdeo Aggarwal, MD of Motilal Oswal Financial Services has even said that he has not seen such tremendous participation in the First Quarter in a decade time.
Impact of COVID-19
Stockbroking and depository services have been declared as essential services and accordingly, the Company has faced no business stoppage/interruption on account of the lockdown. In light of the steep decline in the indices, the Company, in the normal course of business, placed additional margin money with the stock exchanges.
If we see the cash flow statement carefully, we will find that HDFC securities has issued shares worth Rs. 4.29 crores this quarter. The numbers of shares in the balance sheet have gone up by 10k. These are mostly ESOPs shares. Therefore, the per-share value of ESOP comes out to be 4290.