Edelweiss: @ 38.5 Holds Great Potential Over the Next 3-5 Years

Edelweiss Capital : Its Like WINE (as it gets older will Taste better)

Price---Rs38.5

Market Cap------Rs 2900 Crs

Whats the logic?

Lets come to all the negatives first.

1)Amazing company came at the peak of the stock market boom. ENJOYED hefty valuations. Ipo money nicely gobbled up.

I will agree with you...See IPO was @ 725-825 and shares were issued @ 825...(adjusted to split @nd bonus = Rs 82.5).... The Price never came....

BUT SEE IF IT PERFORMED?????

I Would like to compare the Profits

2008-----------Rs273 Crs

2009-------Rs186 Crs

2010----------Rs229 Crs

2011Expected--------Rs245-250 Crs

The thing is when the company came with IPO @ Rs82.5(adjusted price)

market cap stood @ 6200 odd Crs with it opening around 120 (adjusted) market cap 9000 crs.

2things to note-edelweiss profits were growing y-oy at a scorching speed and it enjoyed high ROE'S above 20pc, which have since fallen to 10-12pc

Now Y early morning do i write about it?? Because i feel it could very well be the wine 5-10years down the line

1)Edel now derives a huge chunk from Interest income. (Between 50-60crs net interest income from last 4 quarters.

2) It looks that it is trying to shift to a stable alternative with regard to lending..

3)Look at signs for future growth..

Hiring of Bank of America Indian CFO : RINGING FEW MORE BELLS OVER STRONG BANKING BUZZ DOING THE ROUNDS

4)The Insurance rollout; the NBFC plan to disburse 5000 odd crs..

I see a lot of Visibility but will it translate. I feel it would. Even by 50pc execution is done. u count see the stock 3x from here above RS100 in a couple of years.

If it gets a Banking license it would add up close to 1000crs market cap on that day itself.

If India is to grow 8 or 9 or 10% savings will grow and will be channelised in coming few years. It will be among the top beneficiaries of this in coming few years. Its got a great team. Fairly valued @15x in this beaten down market.

A big surprise which no one would have payed heed to Lehman bros 1 cr shares in company have in all likelihood been sold in the December quarter(no disclosures on the exchange thought)

Note to all readers:

I have VESTED interests on the stocks i write on.

Don't invest more than 5pc of your total corpus on any of the stocks

Do your study before investing.

If you believe India will grow 9% BUY the stock..... STAGGER YOUR INVESTMENTS OVER A MONTH...........................................................

One more thing in India it is all about (PE). stocks often move on PE derating and rerating...........

@ current pat of 250 crs traing at 11.6 times. In a good market so called bull market would trade @ 20 PE DIRECTLY YOUR PRICE GOES TO 70.....btw goldman sachs trades @ 12 times that monster cant grow that big but this has low base greater chances of growth if visibility is there for me

for this company has to be good...growth should be there..and atleast main profit of 250crs 3 years down the line...so chances of loosing are less...

A good quality stock.......................Play on India's Financials..

Good Luck Keep Minting.....................................CU SOON WITH ANOTHER DETAILED IDEA

Aditya