this is a right time to buy stressed assets at discounted prices…hence it makes sense to raise money and be ready for deals
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i have found some contradictory things in Q4 Results.
Employee benefits have increased from 324 to 697 Crores in Q4 and 1407 to 1616 for full year and other expense have increased from 303 to 455 crores in Q4 and 1264 to 1341 crores for full year. however, In slide 19 of investor presentation, they are showing fixed cost reduction of 500 crores in FY21 attributable to savings in fixed people cost and fixed premises cost. i am not sure where this savings are reflected in FS?
I asked edelweiss, but have not got any response.
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they have paid a bonus this time, that more of a one-time thing. I belive fixed cost has been reduced, there is not question on that.
well, when they are bleeding on top line and bottom line, rising in EE benefit expense is cause of concern. for 9 months, we are seeing that there is cut in employee benefit expense compared to last year but then in the last quarter EE benefit expense doubles. Generally company accrued bonus evenly throughout the year and not just in the last quarter.
if we combined total employee benefit expense and other expense, there is increase of 286 crores compared to last year and as per investor presentation there is savings of 500 crores in fixed cost which means there is increase in 786 crores (286+500) of variable cost. revenue from operations (excluding net gain on fair value changes) got reduced to 7136 crores from 9318 crores in last year. it is strange to see revenue from operations decreased while variable cost increased.
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Seems things are moving to a more focused Strategy for the group 
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I don’t understand, either this move is positive or negative for Edelweiss.
It is very positive. They can now use the capital to focus on the core insurance businesses, and Gallagher can focus on the distribution through the broking firm. Simplifies the structure, gets capital into the business, brings in some much needed focus.
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Did you say acquire companies? Which direction would you take?
There are a couple of areas where we are seeing a lot of opportunities to make very smart tactical acquisitions; one is in the fintech space. We think the entire credit space is getting disrupted in a very fast way given the NBFC crisis, credit issues in SME and housing finance. There are some good analytics firms. There are some good firms which underwrite risk management on retail credit portfolios.
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we all were very optimistic when they have sold wealth management business but the profit from wealth management business in Q4 just fade away with impairment and increase in EE benefit and other expense.
| Q4 | |
|---|---|
| Gain on sale of wealth management division | 1,406.35 |
| Impairment in Q4 | (932.88) |
| Increase in EE benefit QoQ | (372.61) |
| Increase in other expense QoQ | (151.72) |
| Net Impact | (50.86) |
Its good that they are selling loss making business but then given the high employee and other cost & Further impairment, it won’t have impact on Income statement.
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https://www.bseindia.com/corporates/shpSecurities.aspx?scripcd=532922&qtrid=110.00
Mohnish Pabrai reduced their holding.
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Mohnish Pabrai has changed his investment framework. Probably EFS does not fit in his new framework.
However, Rakesh Jhunjhunwala has increased his stake from 1.19% to 1.61%.
Mohnish still owns a little under 5%. Reduction seems to be a little over 1%. His reasons will be his own, no point speculating.
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News based stock movement
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I think jhunjjhunwala raising his stake news will keep it moving for at least another two or three days. then it would be great if they post positive numbers this quarter then this will give it a push to move further. hopefully then mutual fund will jump into it
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Edelweiss credit rating update by Acuite Ratings & Research Limited (“ACUITE”)
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Hi everyone,
Hope all are safe and healthy.
Recently I heard stock market veteran Mr. Basant Maheshwari’s interview. To find opportunities in banks/financials, he said one should look at the companies which are getting private funding/raising funding comfortably, because back in 2008 after the financial crisis Citi bank was brought back to life by private funding.
So, taking this analogy and matching it with current environment, it seems Edelweiss fits the bill as it is getting funding comfortably.
Criticism is invited for healthy discussion.
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Bro, you will not able to find criticism on Edelweiss at the Edelweiss forum. We have bias toward Edelweiss that why we are tracking it.
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You are right, but there maybe someone who has some good reason to dislike the company.
Also, if we think like this - after a bull run in Nbfcs for 2015- till ILFS crisis, there might be some consolidation in the industry. Currently, the industry as whole is in downcycle. Kenneth Andrade spoke of relevance of a downcycle - it gives you good pricing while you have to pay for growth at the same the time. So, only thing is if Edelweiss manages to survive this time, it may benefit steeply from the upcycle which will definitely come in the near future.
Well here is one.
High GNPA - should cross 10% in next one year if you consider deteriorating asset quality.
Low revenue amd profit because of sell down.
Remember lollapalooza effect?
This should be reverse of this. When things are going bad and management makes some bad decision plus assets quality deteriorating plus people not trusting the company should make things very bad for Edelweiss.
Also the balance sheet cannot take any more hit I believe and there book value should get around 45-50 range because of ongoing problems and they not being able to collect money from there assets. Wholesale credit will be the biggest drag next would be insurance business.
The question is can Mr shah allocate capital in the right way because this is the only skill that can put life back into this crippling company.
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