HDFC Securities, the flagship company of HDFC Group has come up with the third-quarter results. In the third quarter i.e. Dec 2020, HDFC Securities has clocked revenue of 335 crores; it was only 214 crores last year in the same period. This has translated into a massive 56% growth in revenue. Total expenses have also gone up to 110 crores as compared to 86 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 third quarter for FY20-21. The PAT has also grown by 73% to reach 163 crores as compared to just 94 crores last year.

Results Snapshot

Euphoria in the market

If we see the market stats carefully during April-Dec 2020, retail investors have participated big-time as a trader and investor, both. The WFH has given a lot of retail investors a time to invest in the market. The continuous rise of market is also playing in the mind of investors who are buying stocks as they don't want to miss this opportunity of making easy money. This has resulted into good brokerage income for stock brokers in the market.

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.

UnlistedZone View

If we annualize the HDFC Securities performance of 9 months, then it will easily touch the EPS of ~400 in FY20-21. This will translate into P/E of 25x at Rs.10,000 per share in the unlisted market.  The listed players like Angel Broking and ICICI Securities are trading at P/E of 34x and 20x on FY2021 earnings.

To check HDFC Securities Results, click here