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Bank brokerages to continue reporting strong performance: Report

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4 years ago

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The domestic capital markets continue to remain on an upward trajectory after a strong performance in FY2021.

The average daily turnover (ADTO) increased to Rs 27.92 lakh crore in FY2021 from Rs 14.39 lakh crore in FY2020, registering an annual growth of 94 per cent. Transaction volumes remain strong in the current fiscal, with the markets clocking an ADTO of Rs 56.36 lakh crore in H1 FY2022.

As per ICRA, the market performance has been supported by favourable liquidity in both domestic and international markets, optimism related to a recovery after the graded reopening of the economy, progress on vaccination rollout and steady retail investor momentum.

Throwing more light, Samriddhi Chowdhary, Vice President & Sector Head – Financial Sector Ratings, ICRA says, “The pool of ICRA-rated bank brokerages reported a strong performance in FY2021 with the estimated average daily turnover (ADTO) increasing 28 per cent Y-o-Y to Rs 1.51 lakh crore from Rs 1.18 lakh crore in FY2020, led by the healthy growth in the retail segment.

Despite the changes in the margin requirements, the performance remained healthy in Q1 FY2022 with an estimated ADTO of Rs 1.64 lakh crore, driven by favourable retail investor sentiment. However, the market share of the sample pool of ICRA-rated bank brokerages in terms of transaction volumes declined in FY2021 and moderated further in Q1 FY2022 as they continue to lose share to discount brokers.”

Bank-brokerages reported a strong uptick in earnings in FY2021 registering a year-on-year (Y-o-Y) growth of 40 per cent in total revenues and 80 per cent in profit after tax. The cost structure and operational efficiency of the bank brokerage companies also improved over the past few years with focus on the rationalisation of branches coupled with cautious efforts towards the transition to a digital business model, thereby improving the operational efficiency across brokerages.

Bank-brokerages have been increasingly looking at other non-broking sources of income, namely capital market lending business, distribution income and investment banking revenue. Bank-brokerages have significantly scaled up the margin funding business over the past fiscal, moving in line with the capital market rally, which has resulted in an increase in their borrowing level.

The retail broking segment has witnessed a significant disruption in the last few years due to the growing prominence of discount brokerages. The competitively priced offerings of discount brokers and the no-frill basic accounts and services have resulted in the realignment of the pricing strategy across the industry.

Adds Chowdhary, “apart from attracting clients from full-service providers, discount brokerage houses have helped expand the market by bringing on board a large number of first-time investors. While the market share for bank brokerages in terms of active clients moderated in FY2021, primarily owing to the faster scaling up of the discount brokerage houses, they reported a strong performance as reflected by the healthy operating metrics and surge in earnings.”

ICRA expects bank brokerages to continue to build their retail franchise and focus more on technology and digital models for customer acquisition. Supported by these factors, bank brokerages are expected to register a healthy growth in client addition as well as transaction volumes, though their share in total active clients would moderate owing to the rapid expansion of the discount broking model. The blended yields are expected to compress going forward, though the focus on fee and fund-based income would support the profitability.

Adds Chowdhary, “Bank brokerages are expected to continue to enjoy better brand recall, trust, higher credibility and financial flexibility by virtue of being a part of banking groups and would, therefore, remain a prominent part of the industry value chain. Bank brokerages are also increasingly looking at the emerging demographic opportunities and new geographical base, which is facilitated through online channels. Going forward, the ability of the bank brokers to effectively ramp up their digital initiatives, attract millennial clients and expand to a newer geographical base such as Tier II and Tier III cities would be critical.”

ICRA expects the net operating income (NOI) of bank brokerages to grow 20-25 per cent year-on-year (Y-o-Y) in FY2022 supported by steady broking income along with an uptick in the margin funding and distribution businesses; the ramp-up of other capital markets related businesses could further support the earnings profile. The net profit for bank brokerages is expected to grow 17-20 per cent during the same period.

The borrowings levels of bank brokerages are expected to increase in the current fiscal to support their margin funding business. The gearing levels of bank brokerages are expected to be in the range of 1.5-2 times in FY2022 at an industry level while the gearing across entities would vary between 1 to 3 times based on the scale of margin funding operations.

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Indian Hotels clocks 48.6 pc drop in Q2 net profit to Rs 285 crore

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8 hours ago

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November 4, 2025

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Mumbai, Nov 4: Tata Group’s hospitality arm, Indian Hotels Company Limited (IHCL), on Tuesday reported a 48.6 per cent year-on-year (YoY) drop in net profit to Rs 285 crore for the quarter ended September 2025 (Q2 FY26).

The company had posted a profit of Rs 555 crore in the same quarter last financial year (Q2 FY25), according to its stock exchange filing.

Despite the fall in profit, IHCL’s revenue from operations rose 11.8 per cent to Rs 2,040.8 crore, compared with Rs 1,826 crore in the corresponding period of the previous financial year.

The company’s EBITDA (earnings before interest, tax, depreciation, and amortisation) also showed improvement, rising 14.2 per cent year-on-year (YoY) to Rs 572 crore from Rs 501 crore a year ago.

The EBITDA margin improved slightly to 28 per cent, compared with 27.4 per cent in the same quarter last financial year.

On the market front, IHCL shares ended at Rs 743.75 on the BSE, down Rs 3.30 or 0.44 per cent on Tuesday.

Over the last five days, the stock gained Rs 2.35 or 0.32 per cent, while in the past month, it rose Rs 20.65 or 2.85 per cent.

However, over a longer period, the stock has faced some pressure. In the last six months, IHCL shares fell Rs 57.60 or 7.18 per cent, and on a year-to-date (YTD) basis, they are down Rs 129.40 or 14.81 per cent.

Still, over the past one year, the stock has gained Rs 77.65 or 11.65 per cent.

The Indian Hotels Company Limited (IHCL) is South Asia’s biggest hospitality group. It was founded in 1903 by Jamsetji Tata, who started it with the opening of The Taj Mahal Palace in Mumbai.

The company is best known for its Taj hotels and its unique culture called “Tajness,” which combines Indian tradition with modern hospitality.

Today, IHCL runs more than 550 hotels across four continents and focuses on being both innovative and sustainable.

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Business

Centre to launch third round of PLI scheme for specialty steel

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15 hours ago

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November 4, 2025

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New Delhi, Nov 4: The government was set to launch the third round of the production-linked incentive (PLI) scheme for Specialty Steel on Tuesday, which is one of the key initiatives under the Atmanirbhar Bharat vision.

The PLI 1.2 launch will be presided over by Union Minister H.D. Kumaraswamy, in the presence of senior officials, and other stakeholders from the sector, according to Ministry of Steel.

The ministry said that the PLI Scheme for Specialty Steel, approved by the Union Cabinet in July 2021 with an overall outlay of Rs 6,322 crore, aims to transform India into a global hub for production of high-value and advanced steel grades.

The PLI scheme has attracted a committed investment of Rs 43,874 crore so far, with Rs 22,973 crore already invested and over 13,000 jobs created under the first two rounds.

The scheme covers 22 product sub-categories including super alloys, CRGO, alloy forgings, stainless steel (long and flat), titanium alloys, and coated steels.

Incentive rates range from 4 per cent to 15 per cent, applicable for five years starting FY 2025–26, with disbursal beginning in FY 2026–27.

The base year for pricing has also been updated to FY 2024–25 to better reflect current trends.

The PLI scheme incentivises incremental production and investment in identified product categories, thereby enhancing value addition within the country and reducing import dependence in critical sectors such as defence, power, aerospace and infrastructure.

Meanwhile, the country aims to achieve 300 million tonnes of crude steel production capacity by 2030. Notably, India’s domestic steel demand is growing at an impressive 11-13 per cent, fuelled by large-scale infrastructure projects, while global demand faces a slowdown, according to Steel Ministry.

Steel production surged by a robust 14.1 per cent in September compared to the same month of the previous year on the back of increased demand from big-ticket infrastructure projects being carried out by the government.

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Business

Indian stock markets end higher after two days of losses

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1 day ago

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November 3, 2025

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Mumbai, Nov 3: Indian equity markets ended a volatile session on a positive note on Monday, snapping a two-day losing streak.

Gains in real estate and state-owned bank stocks helped lift the indices despite early weakness.

After opening lower, the Sensex recovered to touch an intra-day high of 84,127 before closing 39.78 points, or 0.05 per cent, higher at 83,978.49.

The Nifty also gained 41.25 points, or 0.16 per cent, to end at 25,763.35.

“The Nifty oscillated between 25,700 and 25,800 through the day, showing resilience after briefly dipping below the October 24 low of 25,718,” analysts said.

“The zone between 25,660–25,700 once again acted as a strong demand pocket, helping the index recover intraday losses and maintain a constructive tone ahead of key global data releases,” they added.

Among the Sensex stocks, Maruti Suzuki fell over 3 per cent and was among the top losers along with Titan Company, BEL, TCS, ITC, NTPC, Bajaj Finserv, Tata Steel and tech Mahindra.

On the other hand, Mahindra & Mahindra, State Bank of India, Tata Motors Passenger Vehicles, and HCL Tech were the major gainers.

In the broader markets, the Nifty MidCap index rose 0.77 per cent, while the Nifty SmallCap index advanced 0.72 per cent, showing strength beyond the frontline stocks.

Among sectoral indices, PSU bank shares led the rally, with the Nifty PSU Bank index climbing 1.92 per cent.

Bank of Baroda surged 5 per cent, while Canara Bank, Bank of Maharashtra, Bank of India, and Indian Bank also gained.

The Nifty Metal and Realty indices also added up to 2 per cent each.

Meanwhile, the FMCG, Private Bank, and IT indices slipped up to 0.4 per cent, capping the market’s overall gains.

Analysts said that despite mixed global cues and cautious investor sentiment, buying in select sectors helped the markets end the day in the green.

“The domestic market ended on a marginal positive note as profit booking was visible at the higher levels due to the absence of fresh domestic triggers,” market watchers said.

“While the broader market outperformed since the quarterly earnings are steering investors’ preference to take a short- to medium-term view,” they mentioned.

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