Fundamental Analysis of Edelweiss Broking Limited v/s IndiaInfoline & Geojit BNP Paribas

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SUMMER PROJECT REPORT

“Fundamental Analysis of Edelweiss

Broking Limited”

Prepared for the Mumbai University in the partial fulfillment

of the requirement for the award of the degree in...

MASTERS OF MANAGEMENT STUDIES

Submitted By:

ANISH VYAS

Roll No: 2, MMS: 2009-2011

Under the Guidance of:

Prof. Abhay Singh

SFIMAR

St Francis Institute Of Management And Research,Mt.

Poinsur,S.V.P Road, Borivali (W) Mumbai.

Batch- 2009-2011

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Company Certificate:

Date:

TO WHOMSOEVER IT MAY CONCERN

This is to certify that Anish Vyas has successfully completed his Summer project

on “Fundamental Analysis of Edelweiss Broking Limited” for a period of two

months. i.e. from May 2010 to June 2010.

During this period, we found him/her sincere, honest & hardworking.

We wish him/her all the best for further assignments.

For Edelweiss Broking Limited.

Signing Authority

Name: Rahul Jain.

Designation: Vice President Sales.

Department: Retail Broking Limited.

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College Certificate:

This is to certify that the Project work Titled “Fundamental Analysis of Edelweiss

Broking Limited” submitted by me in partial fulfillment of the requirement for the

degree of Master of Management Studies to St. Francis Institute of Management

and Research under Mumbai University, is an original work and the same has not

been submitted either to St Francis Institute of Management & Research (under

Mumbai University) earlier or to any other institution.

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Acknowledgement:

Any project would be incomplete without felicitating those instrumental in its

successful completion. I honestly feel that the accolades for this project cannot

just belong to one individual because it has been the result of consolidated efforts

of many people whom I would like to express my concern and gratitude.

I am grateful to Edelweiss Broking Limited for having given me this opportunity

which has helped me in gaining an in depth knowledge in financial markets. I

extent my sincere thanks to Mr. Karan Shah for giving me this opportunity to take

up this project.

Special thanks are also due to Mr. Rahul Gandhi (Branch Manager – Retail

Broking- Edelweiss Broking Limited) for giving his valuable inputs at every stage of

project completion. His constant encouragement and words of wisdom have been

very significant in the completion of this project.

I express my deepest gratitude to Prof. Abhay Singh (Faculty of Finance – St.

Francis Institute of Management and Research) under whose guidance I have

successfully completed this project.

I am also very much grateful to Dr. Thomas Mathew (Director – St. Francis

Institute of Management and Research) for providing me with this unique

opportunity.

I would also like to thank all those people whose names have not been mentioned

here, but who were very instrumental in the successful completion of this project.

Anish Vyas.

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Executive Summary:

The banking scenario in India is itself huge, covering the different facets of the

economy. By and large, investment banks in India are itself an institution which

generates funds in two different ways. The first manner in which it works is by

drawing public funds via the capital market by way of selling stock in their

company. The other way in which it operates is to seek for venture capital or

private equity, as a substitute for a stake in their company.

At the macro level, investment banking is related with the primary function of

assisting the capital market in its function of capital intermediation, i.e., the

movement of financial resources from those who have them (the investors), to

those who need to make use of them for producing GDP (the issuers). Over the

decades, investment banks have always suited the needs of the finance

community and thus become one of the most vibrant and exciting segment of

financial services.

The project emphasises on financial aspects of an investment banking firm

through ratio analysis, and comparison has been done with other investment

banking firm, to see how this firms are growing with respect to its financials.

The study will help to understand the competency between different investments

banking firm. It also emphasises on which company is financially strong as

compared to other firms.

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Table of Contents:

Sr.No. Particulars Page

No.

1 Title Page 1

2 Company Certificate 2

3 College Certificate 3

4 Acknowledgement 4

5 Executive Summary 5

6 List of Tables 7

7 List of Figures 8

8 Introduction to Company Profile & Organizational

Chart

9

9 Department Introduction & Organizational Chart 13

10 Project Introduction & Need for the Study 15

11 Objectives of the Study 16

12 Research Methodology 16

13 Data Collection & Research Design 16

14 Analysis of Data & Results 20

15 Findings & Interpretations 48

16 Future Scope 51

17 Recommendations & Conclusion 52

18 Bibliography, References, Websites, etc. 54

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List of Tables:

Sr.No. Particulars Page No.

1 Profit & Loss Statement of Edelweiss Capital Ltd. 17

2 Balance Sheet of Edelweiss Capital Ltd. 18

3 Ratios of Edelweiss Capital Ltd. 19

4 Ratios of India Infoline Ltd. 32

5 Ratios of Geojit BNP Paribas Financial Services. 41

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List of Figures:

Sr.No. Particulars Page

No.

Edelweiss Capital Limited.

1 Gross Profit Ratio. 20

2 Operating Ratio. 21

3 Net Operating Ratio. 21

4 Net Profit Ratio. 22

5 Current Ratio. 23

6 Quick Ratio. 24

7 Proprietary Ratio. 25

8 Capital Gearing Ratio. 26

9 Debt Equity Ratio. 26

10 Return on Capital Employed. 27

11 Return on Proprietor’s Fund & Return on Equity Share Cap. 27

12 Debtor’s Turnover Ratio. 28

13 Debt Collection Period. 28

14 Earning Per Share. 29

15 Price Earning Ratio. 29

16 Dividend Payout Ratio. 30

17 Debt Service Ratio. 30

India Infoline Limited.

18 Management Efficiency Ratios. 33

19 Financial Stability Ratios. 34

20 Profitability Ratios. 35

21 Overall Efficiency Ratios. 36

Geojit BNP Paribas Financial Services Limited.

22 Management Efficiency Ratios. 42

23 Financial Stability Ratios. 43

24 Profitability Ratios. 44

25 Overall Efficiency Ratios. 45

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Introduction to Company:

Edelweiss is one of the leading financial services company in India. Its current

businesses include investment banking, securities and retail broking and

investment management. The core inspiring thought of ideas creating wealth and

values protecting it is translated into an approach that is led by entrepreneurship

and creativity and protected by intellectual rigor, research and analysis.

At Edelweiss you can build a personal relationship with our investment

professionals. We see investing from your perspective, and offer

recommendations based on your needs and preferences. To all the investors -

From access to top research to investment guidance and portfolio planning, we

offer it all!

Chairman, CEO and Founder of Edelweiss. Mr.Rashesh Shah has previously

worked for ICICI (now ICICI Bank, India’s largest private sector financial

conglomerate) where he handled a World Bank aided program for export-

oriented projects. He was subsequently with Prime Securities as Head of

Research. Mr. Shah’s relentless focus is on organization building and human

capital development. He has been featured in a variety of publications, including

The Far Eastern Economic Review, Business India, Business World and The

Economic Times. Mr. Shah earned an MBA from the Indian Institute of

Management, Ahmedabad and a Bachelor’s degree in Science from the University

of Bombay.

Greater Pacific Capital, a global equity fund promoted by a clutch of former

Goldman Sachs executives, has bought out Connect Capital’s stake in Edelweiss

Capital, a Mumbai-based financial services firm. Edelweiss Capital was co-founded

in 1995 by Rashesh Shah, an IIM Ahmedabad graduate from the 1989 batch and is

now valued at $ 150 m. The London-based Greater Pacific has also invested

additional money in the company thereby taking a 20% stake in Edelweiss which

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does institutional broking, investment management and arranges financing and

M&A deals for companies, industry sources told. The deal values the 10-year-old

firm at about $150m. Greater Pacific was promoted among others by two former

Goldman Sachs executives, Ketan J Patel, the former managing director of its

strategic group, and Joe M Sealy. Edelweiss Capital, founded by former ICICI Bank

executives Rashesh Shah and Venkat Ramaswamy for about $250,000 in 1995,

specializes in corporate finance and investment banking deals involving medium-

size companies. The firm has raised about $400m in about 80 deals and clocks an

annual revenue of about $30m. About 80% of the firm is owned by the

promoters and employees. Of this, the employees alone own about 25-30%. The

firm is now raising a real estate fund and a private equity fund of more than

$100m each to take advantage of the opportunities thrown up by the country’s

growing economy. Some of its clients include WNS Global Services, a leading BPO

firm, iGATE Global Solutions, Essar Tele-holdings, and Daksh e-Services. The

financial services business in the country is doing well thanks to a roaring stock

market, rising consumerism and growing appetite for fund raising and investment

on the part of both domestic and foreign firms.

Various Products Offered by the Company:

� Products: Stocks, Derivatives, IPO, MF, Strategies

� Trading Accounts with different features: Trader, Investor

� Brokerage Plans: To suit needs of every client

� Model Portfolio based on comprehensive analysis of your investment

objectives

� Advanced Data tools

� Customized investment Strategies

� Manage all asset classes under My Portfolio

� Financial Research on your fingertips

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Services Offered by the Company:

� Investment Banking.

� Institutional investment.

� Asset management.

� Wealth management.

� Private client brokerage.

� Insurance brokerage.

� Wholesale financing.

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Organizational Chart:

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Department Introduction:

Client Advisory Services leverages the diverse professional experience within the

Private Client Group to provide timely consulting to help clarify goals, examine

alternatives, and implement clients' decisions over time.

Business Transition Services—The Business Transition Services program helps

successful business owners address the complex inter-related issues involved

when making changes in management or ownership of their businesses. At such

times, artificial distinctions between the owner's personal or family matters and

their business concerns break down. We work closely with owners to clarify what

their future relationship with their businesses will be. We develop alternatives to

achieve their goals, emphasizing:

� Specialized strategic analysis, with recommendations tailored to your

business situation.

� Detailed financial modeling of the owner's personal and business finances.

� A transition plan that integrates business, family, and financial issues.

Capital One will provide implementation services, not just advice, to assure

that the owner's objectives are achieved.

Personal Wealth Advisory Services—Our wealth advisory services gives successful

individuals superior strategies to make the most of our clients' financial

opportunities. We develop a comprehensive profile of each client's situation and

use financial models to examine scenarios in detail. Financial modeling allows the

client to see the current and long-term impact of choices on financial security,

taxation, wealth preservation, and other concerns such as gifting and

philanthropy. The ability to compare alternatives in detail simplifies the decision-

making process and gives the client confidence in the selected strategy.

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Department Chart:

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Need for the Study:

A method of evaluating a security that entails attempting to measure its intrinsic

value by examining related economic, financial and other qualitative and

quantitative factors. Fundamental analysts attempt to study everything that can

affect the security's value, including macroeconomic factors (like the overall

economy and industry conditions) and company-specific factors (like financial

condition and management).

The end goal of performing fundamental analysis is to produce a value that an

investor can compare with the security's current price, with the aim of figuring

out what sort of position to take with that security (underpriced = buy, overpriced

= sell or short).

This method of security analysis is considered to be the opposite of technical

analysis.

Fundamental analysis is about using real data to evaluate a security's value.

Although most analysts use fundamental analysis to value stocks, this method of

valuation can be used for just about any type of security.

Objectives of the Study:

Fundamental analysis is performed on historical and present data, but with the

goal of making financial forecasts. There are several possible objectives:

� To conduct a company stock valuation and predict its probable price

evolution.

� To make a projection on its business performance of Edelweiss Capital Ltd

with Geojit BNP Paribas Financial Services Ltd & India Infoline Ltd.

� To evaluate its management and make internal business decisions.

� To calculate its credit risk.

� To meet the given number of sales target in the company.

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Development Plan:

� First obtaining income statement & Balance sheet of Edelweiss Capital Ltd

for past three years, and then calculating ratios based on the financial

statements & comparing the performance.

� Based on the the ratios calculated we will measure the performance of

Edelweiss Capital Limited & value the company’s stability & credit risk.

� Procuring the financial statements of Geojit BNP Paribas Financial Services

Ltd & India Infoline Ltd and comparing them with Edelweiss Capital Limited.

Geojit BNP Paribas Financial Services Ltd & India Infoline Ltd are the major

competitors of Edelweiss Capital Ltd therefore comparing their

performance will give overall picture of the company.

Research Methodology:

Research Design: Descriptive.

Collection of Data:

For this research secondary data is used such as websites,

discussions with seniors, obtaining information from senior authorities.

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PROFIT & LOSS STATEMENT OF EDELWEISS CAPITAL LIMITED.

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BALANCE SHEET OF EDELWEISS CAPITAL LIMITED.

Mar-07 Mar-08 Mar-09

Share Capital 5.04 37.73 37.47

Reserves & Surplus 577.03 1,809.27 2,076.62

Total Shareholders Funds 582.07 1,847.00 2,114.09

Secured Loans 6.76 130.47 243.93

Unsecured Loans 380.23 1,439.03 518.44

Total Debt 386.99 1,569.50 762.37

Minority Interest 139.88 479.82 398.3

Total Liabilities 1,108.94 3,896.32 3,274.76

Fixed Assets

Gross Block 21.33 50.02 65.71

Less: Accumulated Depreciation 7.59 14.52 27.82

Net Block 13.74 35.5 37.89

Capital Work in Progress 3.27 7.92 14.86

Investments 81.44 760.13 269.76

Current Assts.,Loans & Advances

Current Assets 899.02 3,090.10 2,229.00

Loans & Advances 298.45 1,268.24 1,242.12

Less: Current Liabilities & Provisions 186.98 1,265.57 518.87

Net Current Assets 1,010.49 3,092.77 2,952.25

Miscellaneous Expenses not w/o 0 0 0

Total Assets 1,108.94 3,896.32 3,274.76

Contingent Liabilities 554.26 1,218.21 1,124.98

APPLICATION OF FUNDS :

SOURCES OF FUNDS :

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RATIOS OF EDELWEISS CAPITAL LIMITED.

2007 2008 2009

Dividend Per Share -- 2 3

Management Efficiency Ratios

Gross Profit Ratio (%) 47.99 41.7 38.5

Operating Ratio(%) 47.4 40.08 46.7

Net Operating Profit Ratio (%) 53.02 60.17 53.48

Net Profit Ratio (%) 29.8 27.05 23.33

Financial Stability Ratios

Current Ratio 2.83 2.33 2.68

Quick Ratio 3.21 1.44 1.9

Proprietor Ratio 0.52 0.47 0.64

Capital Gearing Ratio 0.66 0.85 0.36

Debt Equity Ratio 0.49 0.64 0.48

Profitability Ratios

Return On Capital Employed (%) 28.9 25.89 12.94

Return On Proprietor's Funds (%) 24.45 19.2 8.64

Return on Equity Share Capital (%) 24.45 19.2 8.64

Overall Efficiency Ratios

Inventory Turnover Ratio -- -- --

Debtors Turnover Ratio 7.85 9.21 8.13

Debt Collection Period 46.5 39.7 44.9

Earnings Per Share 24.44 36.12 24.36

Price Earning Ratio -- 22.91 10.6

Dividend Payout Ratio -- 0.05 0.12

Debt Service Ratio 10.53 3.26 3.57

Creditor's Turnover Ratio -- -- --

Creditor's Payment Period -- -- --

Book Value 129.51 246.43 282.1

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ANALYSIS OF RATIOS OF EDELWEISS CAPITAL LIMITED.

MANAGEMENT EFFICIENCY RATIOS:

� Gross Profit Ratio decreased in 2008 due to increase in expenses inspite of

increase in sales, due to introduction into retail broking. In 2009 it

decreased even further because sales decreased drastically because of

recession. The sales increased by Rs.713.62 crore and this was due to

introduction of Edelweiss into retail broking. In 2009 due to recession sales

had reduced from Rs.1081.95 crore to Rs.896.03 crore resulting in a

decrease in the gross profit ratio.

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� Operating Ratio decreased in 2008 because of increase in sales even

though increase in expenses. In 2009 Operating ratio increased due to

decrease in sales inspite of expenses remaining higher. As it can be seen

that in 2009 the operating ratio is high as compared to 2008 but less than

2007, it is because that the selling expense and employee cost was high in

2009, thus it decreases the efficiency of the company.

� Net Operating Profit Ratio decreased in 2008 because of increase in sales

even though increase in expenses. In 2009 Net Operating Profit Ratio

increased due to decrease in sales inspite of expenses remaining higher. As

net operating profit ratio is less in 2009 as compared to 2008.It has

increased in 2008 because company has diversified in retail for its broking

firm. But the global slowdown has affected its business in 2009.

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� Net Profit Ratio decreased in 2008 because of increase in interest &

operating & administration expenses. In 2009 it decreased due to reduction

sales resulting in decline in net profit. Net Profit Ratio decreased in 2008

because of increase in interest by Rs.182.44 crore and operating &

administration expenses by Rs.259.05 crore even though there was an

increase in sales. In 2009 it decreased due to reduction in sales resulting in

decline in net profit.

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FINANCIAL STABILITY RATIOS:

� Current Ratio indicates the short term solvency of the company. Current

Ratio in 2007 was 2.83 & decreased in 2008 to 2.33 due to increase in

assets. In 2009 the current ratio is 2.68 which has increased as compared to

2008 due to decrease in current assets. In 2007 CR is highest as compared

to 2008 and 2009, companies current asset have increased mainly due to its

cash balance, and stocks, but in 2008 it has reduced due do reduction in

cash balance, and in 2009 it has increased because company has started

with some new ventures that is mutual funds and retail broking. So from

this ratio it can be seen that company is solvent enough.

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� Quick Ratio indicates the short term solvency position of the company.

Standard quick ratio is 1:1. In 2008 it has decreased because of increase in

Loans & Advances whereas in 2009 it has increased due to reduction in

current liabilities & loan & advances. Increase in Loans & Advances from

Rs.298.45 to Rs.1268.24 crore whereas in 2009 it has increased due to

reduction in current liabilities by Rs.746.7 crore and reduction in loans &

advances.

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� Proprietary Ratio indicates the contribution in the overall capital structure

made by shareholders in the company. In 2008 it has decreased because of

increase in shareholders’ funds & also increase in total assets. In 2009 it has

increased because of decrease in total assets inspite of increase in

shareholders’ funds. As it can be seen that in 2009, proprietary ratio is the

highest as compared to 2007 and 2008, it means in total assets, proprietor

share is more, which shows company is financially stable. In 2008 it has

decreased because of increase in shareholders’ funds from Rs.582.07 to

Rs.1847.00 crore & also increase in total assets. In 2009 it has increased

because of decrease in total assets by Rs.621.56 crore inspite of increase in

shareholders’ funds by Rs.267.09 crore.

� Capital Gearing Ratio has increased due to increase in borrowed funds

whereas in 2009 it has decreased due to decrease in borrowed funds. As it

can be seen that in 2009 the capital gearing ratio is less as compared to

2008 and 2007 which means company is not taking risk, company is utilizing

its own funds for different activities in the business. Capital Gearing Ratio

has increased due to increase in borrowed funds by Rs.1182.51 crore

whereas in 2009 it has decreased due to decrease in borrowed funds by

Rs.807.13 crore.

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� Debt Equity Ratios indicates the amount of debt in comparison with Equity

Share Capital. In 2008 it has increased due to increase in borrowed funds

whereas in 2009 it has decreased due to decrease in borrowed funds. As it

can be seen that in 2009 company is using more of it own funds as

compared to borrowed funds whereas in 2008 company has used more of

borrowed funds, which means company’s financial position is highly

solvent. In 2008 it has increased due to increase in borrowed funds by

Rs.1182.51 crore whereas in 2009 it has decreased due to decrease in

borrowed funds by Rs.807.13 crore.

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PROFITABILITY RATIOS:

� Return on Capital Employed has decreased in 2008 due to increase in

shareholders’ funds inspite of increase in net profit. In 2009 it has

decreased even further due to decrease in net profit. It has decline from

2007 to 2008 but it has decline almost by half in 2009 due to global

slowdown, and slowdown in financial services. Which means the capital

which has been utilised for business purpose is not giving returns. Return

on capital employed has decreased in 2008 due to increase in shareholders’

funds from Rs.582.07 to Rs.1847.00 crore, inspite of increase in net profit

by Rs.182.62 crore. In 2009 it has decreased even further due to decrease

in net profit by Rs.83.55 crore as a result of decrease in sales.

� Return on Proprietor’s Fund & Return on Equity Share Capital has

decreased in 2008 because of tremendous increase in shareholders’ funds.

In 2009 it has decreased even further because of increased in share capital

& decreased in net profit. In 2008 it was down by around 21% and in 2009

it was down by more than 50% it was due to investors was not willing to

invest due to break down in market as it is this ratio is used by investors for

investment purpose in company.

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OVERALL EFFICIENCY RATIOS:

� There is no Inventory Turnover Ratio as Edelweiss Capital Limited belongs

to financial service industry, so they maintain no inventories.

� Debtor’s Turnover Ratio has increased in 2008 due to increase in credit

sales & decreased in 2009 due to decreased in credit sales. The ratio went

up in 2008 but again went down in 2009 but if we see overall in these 3

years it is better from 2007. As it is an Investment banking firm, it provide

various services, provides loan facilities etc, as all the companies are in

recovery period after global slowdown, company is unable to recover its

money faster.

� Debtor’s Collection Period in 2008 decreased because they were efficient in

collecting money from debtors while in 2009 it increased due to non

efficiency in collecting money from debtors and also due to recession. As

seen these ratio we can make out that it has always been around one and a

half month. And that seems to be maintained approximately for three yrs.

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� Earnings Per Share has increased in 2008 due to increase in Net Profit &

Increase in number of shares whereas in 2009 it has decreased due to

decrease in net profit & number of shares. EPS has increased by around

47% in 2008 but again reduced by around 16% due to reduction in net

profit percentage.

� Price Earning Ratio in 2007 was zero as the company was not listed. In

2008 it increased because the market price was higher while in 2009

market price reduced due to recession.

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� Dividend Payout Ratio in 2007 was zero as company has not declared

dividend in 2007. In 2008 the company declared a dividend of Rs.2/share

whereas in 2009 the company declared a dividend of Rs.3/share.

� Debt Service Ratio in 2008 decreased because of drastic increase in interest

and in 2009 it increased because of decrease in interest & net profit.

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Introduction of India Infoline Limited.

They are a one-stop financial services shop, most respected for quality of its

advice, personalised service and cutting-edge technology.

Vision Statement:

Our vision is to be the most respected company in the financial services space.

India Infoline Group:

The India Infoline group, comprising the holding company, india infoline limited

and its wholly-owned subsidiaries, straddle the entire financial services space

with offerings ranging from equity research, equities and derivatives trading,

commodities trading, portfolio management services, mutual funds, life

insurance, fixed deposits, goi bonds and other small savings instruments to loan

products and investment banking.

India Infoline also owns and manages the websites www.indiainfoline.com and

www.5paisa.com the company has a network of over 2100 business locations

(branches and sub-brokers) spread across more than 450 cities and towns. the

group caters to approximately a million customers.

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RATIOS OF INDIA INFOLINE LIMITED.

Mar '07 Mar '08 Mar '09

Dividend Per Share 3 6 2.8


Gross Profit Ratio(%) 32.75 32.97 24.57

Operating Ratio 0.12 0.55 0.01

Expenses as Composition of Total Sales 0.12 0.55 0.01

Net Operating Profit Ratio(%) 31.49 36.12 29.29

Net Profit Ratio(%) 18.17 23.45 18.51



Quick Ratio 1.51 1.29 1.1

Proprietory Ratio 0.78 0.89 0.99

Capital Gearing Ratio 1.61 2.28 0.03

Debt Equity Ratio 0.28 0.13 --


Return On Capital Employed(%) 23.73 21.98 15.49

Return On Proprietor's Fund(%) 17.99 15.93 10.2




Debtors Turnover Ratio 4 2.6 2.43



Price Earning Ratio 32.24 27.83 15.72

Dividend Payout Ratio Net Profit 0.29 0.22 0.75


Creditors Turnover Ratio -- -- --

Creditors Payment Period -- -- --

Book Value 56.88 173.35 36.58

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COMPARISON OF RATIOS OF EDELWEISS CAPITAL LTD WITH

INDIA INFOLINE LTD.

MANAGEMENT EFFICENCY RATIOS:

� The Gross Profit Ratio of Edelweiss is much higher than that of India

Infoline Limited. This is because in 2009 there has been decerease in sales

for Edelweiss Capital Limited & also decrease in sales for India Infoline

Limited. Also the expense of both the companies has decreased.

� The total expenses of Edelweiss are less as compared to India Infoline

Limited because there is an additional expense of Miscellaneous Expenses

& Other Manufacturing Expenses in case of India Infoline Limited.

� Net Operating Profit Ratio of Edelweiss has increased due to decrease in

operating expenses whereas in case of India Infoline it has decreased due

to decrease in operating expenses also decrease in sales.

� Net Profit Ratio of Edelweiss has decreased. This is because of increase in

interest and depreciation expenses. Whereas in case of India Infoline

Limited the Net Profit Ratios has also decreased but it is better than


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Ratio of Edelweiss Capital Limited is 2.68 that is company is able to

maintain as per the standard ratio i.e 2:1. In case of India Infoline Limited

the Current ratio is 1.11 which is below the standard ratio.


Standard quick ratio is 1:1 which the Edelweiss Capital Limited is not able to

maintain whereas India Infoline Limited is also able to maintain the

standard quick ratio which is marginally higher.


made by shareholders in the company. The contribution of shareholders

towards the capital structure is more in case of India Infoline Limited as

compared to Edelweiss Capital Limited.


Share Capital. Debt of the Edelweiss Capital Limited is 0.48 paisa per 1

rupee whereas in case of India Infoline Limited there is no debt taken by

the company.

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� Return on Capital Employed Ratio has decreased for both Edelweiss Capital

Limited and India Infoline Limited. Though India Infoline Limited return on

capital employed has decreased but is higher than that of Edelweiss Capital

Limited. It indicates an increase in its earning capacity and optimum

utilization of funds.

� Return on Proprietor’s Fund has decreased in both the companies but has

decreased majorly in case of India Infoline Limited.

� Return on Equity Share Capital is almost similar to that of Return on

Proprietor’s Fund but is more of India Infoline Limited when compared with


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OVERALL EFFICENCY RATIOS:

� There is no Inventory Turnover Ratio as both Edelweiss Capital Limited &

India Infoline Limited belong to financial service industry, so they maintain

no inventories.

� Debtor’s Turnover Ratio for both the companies i.e Edelweiss Capital

Limited & India Infoline Limited has increased which indicated that the

company is not efficient in collecting it’s payment from there debtor’s.

Debtor’s Turnover Ratio of Edelweiss Capital Limited is higher when

compared with India Infoline Limited.

� Debtor’s Collection Period has increased for both Edelweiss Capital Limited

& India Infoline. It indicates the efficiency of the company in collecting the

debts from their debtor’s. The debt collection period of Edelweiss is better

when compared with India Infoline Limited which much higher.

� Earnings Per Share of both the companies have decreased but India

Infoline Limited earnings per share have reduced drastically. There is only

great difference between Edelweiss Capital Limited and India Infoline

Limited when compared for the year 2009.

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� The Price Earning Ratio is low for Edelweiss Capital Limited as compared to

India Infoline Limited because the market price per share of both Edelweiss

Capital Limited & India Infoline Limited have gone down.

� Dividend Payout Ratio for both Edelweiss Capital Limited and India Infoline

Limited has increased. In 2009 Edelweiss declared a dividend of Rs.3/share

whereas India Infoline Limited declared a dividend of Rs.2.8/share.

� The Debt Service Ratio indicates the capability of the firm to repay its

interest and loans. Debt Service Ratio of Edelweiss Capital Limited is 3.57

whereas that of India Infoline Limited is 14.58. It shows that India Infoline

Limited is more capable of paying its debt as compared to Edelweiss Capital

Limited.

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Introduction of Geojit BNP Paribas.

� 22 years of history in Indian Capital Market:

Geojit BNP Paribas has 22 years of in-depth broking experience in the Indian

Capital Market. More than 495,000 clients and over Rs 9,900 crores (as of 30th

Sep.’09) in Assets Under Management reflect the trust reposed in our expertise.

� Pioneer in Online Trading in Feb. 2000:

In the year 2000, Geojit BNP Paribas pioneered the simple concept of providing

individuals with the facility to trade online. This revolution has given the company

the first mover advantage in online trading. As a creative innovator, Geojit BNP

Paribas uses advanced technology in online trading to meet client requirements

such as customized online trading platforms and many other services.

� Strong Shareholders:

Geojit BNP Paribas is backed by strong shareholders.

In 2007, global banking major BNP Paribas joined the company’s other major

shareholders - Mr. C.J.George, KSIDC (Kerala State Industrial Development

Corporation) and Mr.Rakesh Jhunjhunwala – when it took a stake to become the

single largest shareholder.

� Wide range of products:

Geojit BNP Paribas offers a wide range of trading and investment products and

solutions. Certified financial advisors help clients to arrive at the right financial

solution to meet their individual needs.

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The wide range on offer includes - Equities | Derivatives | Currency Futures |

Custody Accounts | Mutual Funds | Life Insurance & General Insurance | IPOs |

Portfolio Management Services | Property Services | Margin Funding | Loans

against Shares.

� Attractive brokerage slabs:

We provide value for money! To start with, we offer low online brokerage charges

which further decrease automatically, as and when, your volumes increase.

0.03 to 0.01 for intra-day trades

0.30 to 0.10 for delivery trades

Rs 75 to Rs 30 for F&O

� Learn the craft:

You too can develop your trading skills by availing of the effective guidance by our

research department. We offer-

� Daily mails delivered to our client’s mailbox on market conditions and

recommendations

� Technical analysis of BSE 200 Index scrips

� Free monthly investment magazine

� Services of professionally qualified executives at 500 offices across India.

� Our strong research ideas have been instrumental in converting our clients

into successful traders.

� Multichannel service- Internet, Phone, Branch trading:

Trade the way that you want to by selecting from multiple channel options-

Internet, Phone or Branch.

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� First mover advantage:

Geojit BNP Paribas through its first mover advantage in different areas has been

the first to serve investors with its innovative offerings.

� 1st to launch internet trading in the year 2000.

� 1st to launch integrated internet trading system for cash and derivative

segments in the year 2002.

� 1st Indian stock broking company to commence domestic retail broking

operations in any foreign country.

� 1st in the industry to have a global player offering its name thereby

creating Geojit BNP Paribas.

� 1st to launch exclusive branches for women in 2005.

� There deep reach:

They have a pan-India network of over 500 offices with industry certified

executives and a dedicated Call Centre to provide you quality services.

� Wide range of fund options:

Geojit BNP Paribas gives you the option to choose from the 700 plus Mutual Fund

schemes offered by over 35 Asset Management companies such as SBI Mutual

Fund, Reliance Mutual Fund, Franklin Templeton India Mutual Fund, Tata Mutual

Fund, Sundaram BNP Paribas Mutual Fund, Fidelity Mutual Fund, and HDFC

Mutual Fund.

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RATIOS OF GEOJIT BNP PARIBAS FINANCIAL SERVICES LIMITED.

Mar '07 Mar '08 Mar '09

Dividend Per Share 0.4 0.7 0.5


Gross Profit Margin(%) 33.29 30.07 2.37

Operating Ratio 1.43 0.26 3.98

Expenses as Composition of Total Sales 1.43 0.26 3.98

Net Operating Profit Margin(%) 30.22 33.31 9.56

Net Profit Margin(%) 19.16 23.72 9.15



Quick Ratio 2.09 1.23 1.31

Proprietory Ratio 1 1 1

Capital Gearing Ratio -- -- --

Debt Equity Ratio -- -- --


Return On Capital Employed(%) 15.26 28.57 7.63

Return On Proprietor's Fund(%) 9.99 20.64 5.28




Debtors Turnover Ratio 3.46 3.98 2.66



Price Earning Ratio 34.6 19.87 29.46

Dividend Payout Ratio Net Profit 0.4 0.3 0.77


Creditors Turnover Ratio -- -- --

Creditors Payment Period -- -- --

Book Value 9.67 11.18 12.29

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COMPARISON OF RATIOS OF EDELWEISS CAPITAL LTD WITH

GEOJIT BNP PARIBAS FINANCIAL SERVICES LTD.

MANAGEMENT EFFICENCY RATIOS:

� The Gross Profit Ratio of Edelweiss Capital Limited has decreased in the

year 2009 but the gross profit ratio of Geojit BNP Paribas has also

decreased by a great extent. This is because the sales of Geojit BNP Paribas

have reduced and the total expense remains same.

� The total expenses of Edelweiss are less as compared to Geojit BNP Paribas

because there is an additional expense of Miscellaneous Expenses & Other

Manufacturing Expenses in case of Geojit BNP Paribas.

� Net Operating Profit Ratio of Edelweiss has decreased due to decrease in

operating expenses whereas in case of Geojit BNP Paribas it has also

decreased due to decrease in operating expenses also decrease in sales.

� Net Profit Ratio of Edelweiss has decreased. This is because of increase in

depreciation expenses. Whereas in case of Geojit BNP Paribas the Net

Profit Ratios has also decreased but it is not better than Edelweiss Capital

Limited.

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Ratio of Edelweiss Capital Limited is 2.68 that is company is able to

maintain as per the standard ratio i.e 2:1. In case of Geojit BNP Paribas the

Current ratio is 1.32 which is below the standard ratio.


Standard quick ratio is 1:1 which the Edelweiss Capital Limited is not able to

maintain whereas Geojit BNP Paribas is able to maintain the standard quick

ratio which is marginally higher.


made by shareholders in the company. The contribution of shareholders

towards the capital structure is more in case of Geojit BNP Paribas as

compared to Edelweiss Capital Limited.


Share Capital. Debt of the Edelweiss Capital Limited is 0.48 paisa per 1

rupee whereas in case of Geojit BNP Paribas there is no debt taken by the

company.

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� Return on Capital Employed Ratio has decreased for both Edelweiss Capital

Limited & Geojit BNP Paribas. Though Edelweiss Capital Limited return on

capital employed has decreased but is higher than that of Geojit BNP

Paribas. It indicates an increase in its earning capacity and optimum

utilization of funds.

� Return on Proprietor’s Fund has decreased in both the companies but has

decreased majorly in case of Geojit BNP Paribas.

� Return on Equity Share Capital is almost similar to that of Return on

Proprietor’s Fund but is more of Edelweiss Capital Limited when compared

with Geojit BNP Paribas.

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OVERALL EFFICIENCY RATIOS:

� There is no Inventory Turnover Ratio as both Edelweiss Capital Limited &

Geojit BNP Paribas belong to financial service industry, so they maintain no

inventories.

� Debtor’s Turnover Ratio for Edelweiss Capital Limited has decreased which

indicates that the company is efficient in collecting it’s payment from there

debtor’s & for Geojit BNP Paribas it has also decreased which indicates that

the company is efficient in collecting it’s payment from there debtor’s.

Debtor’s Turnover Ratio of Edelweiss Capital Limited is higher when

compared with Geojit BNP Paribas.

� Debtor’s Collection Period has increased for Edelweiss & also increased for

Geojit BNP Paribas. It indicates the efficiency of the company in collecting

the debts from their debtor’s. The debt collection period of Edelweiss is

better when compared with Geojit BNP Paribas which much higher.

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� Earnings Per Share of both the companies have decreased but Geojit BNP

Paribas earnings per share have reduced drastically. There is huge

difference between Edelweiss Capital Limited and Geojit BNP Paribas when

compared for the year 2009.

� The Price Earning Ratio is quite high for Geojit BNP Paribas as compared to

Edelweiss Capital Limited because the market price per share of Edelweiss

Capital Limited & Geojit BNP Paribas has decreased.

� Dividend Payout Ratio for both Edelweiss Capital Limited and Geojit BNP

Paribas has increased. In 2009 Edelweiss declared a dividend of Rs.3/share

whereas Geojit BNP Paribas declared a dividend of Rs.0.5/share.

� The Debt Service Ratio indicates the capability of the firm to repay its

interest and loans. Debt Service Ratio of Edelweiss Capital Limited is 3.57

whereas that of Geojit BNP Paribas is 21.26. It shows that Geojit BNP

Paribas is more capable of paying its debt as compared to Edelweiss Capital

Limited.

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GRAPHICAL REPRESENTATION ON SENSEX INDICIES OF

EDELWEISS CAPITAL LIMITED, INDIA INFOLINE LIMITED &

GEOJIT BNP PARIBAS FINANCIAL SERVICES LIMITED.

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FINDINGS AND INTERPRETATIONS:

FINDINGS FOR EDELWEISS:

� The Management Efficiency ratios indicate that since Edelweiss moved into retail

in 2007, it has been doing well in terms of profit but after 2008 due to recession

profit of Edelweiss has reduced but still the company is in a better position than

some of its competitors.

� Edelweiss hasn’t been financially stable according to the financial stability ratios.

The assets of Edelweiss increased in the year 2008 and then immediately

decreased to a great extent in 2009.The funds borrowed have reduced in 2009 in

comparison to 2008 which shows a slight improvement for Edelweiss.

� According to the profitability ratios, Edelweiss displays a trend of reducing net

profit through the three years. This is due to increase in the shareholders funds

and also due to recession which affected the net profit of Edelweiss in 2009.

� Taking into account all three years, Edelweiss has been efficient with respect to

certain ratios but hasn’t been up to the standards. Till 2008, it has been able to

collect it debts efficiently but then due to recession this ability suppressed. Also

the market price per share of Edelweiss had a reducing trend which lowered the

earnings per share and the price earning ratio. But at the same time Edelweiss

increased the dividend and reduced the debts making it efficient in certain areas.

� Even though companies net profit has been decreased than also there is a

increase in Dividend Per Share over a period of time, which means company is

attracting its shareholders.

� The debt equity ratio doesn’t show much variation. This indicates that every year

the increase of decrease in the debt and equity has more or less been

proportionate.

� Current ratio is on a brighter side though it has declined as compared to ’08 in

’09. This brings the company in a better position as far as the creditors are

concerned.

� Debtor’s ratio had increased in ’08 but came down in ’09, this is result of the

declined sales of the company.

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� A decline in interest coverage ratio is an indicator of the facts that the profit

before interest and tax of the company has reduced. Though it has improved in

‘09 as compared to ’08, the improvement is not substantial.

� An obvious impact of decline in sales is on the profits ratios of the company.

Inspite of a 17.18% decline in sales in ’09 as compared to ’08, the company has

been able to maintain a positive and a reasonably good profit position.

� Return on capital employed by the company is showing reducing trend. The

capital base of the company has increased in ’08 and has remained constant in

’09. However, the ROE ratio has been reduced by 50%. This is not good news for

the owner’s of the company, as profitability of their investment in the company

has been reduced dramatically. Similar analysis can be made for net worth ratio

as it has also declined drastically.

� Despite of not so favorable result in ’09 as compared to ’07 and ’08, the company

has declared a good divided for the shareholders. This shows that the company is

more interested in pleasing the shareholders than accumulating funds for the

future plans of the company. This policy is further indicated by an improved

dividend payout ratio of the company.

� A decline in the earning per share is as a result of decline in the profits of the

company. Thus amount of profit available per share has gone down.

� Increase in the debt collection ratio is not a good sign, as it means that the

company’s collection department is taking more time to recover funds from the

debtors. This is even worse as the company’s sales have reduces. Thus the

company has not been able to manage the debtors properly, despite of reduction

decline in sales.

� Proprietary ratio is showing an improvement. This indicates that the company

has enough assets to cover the proprietary funds (owners’ fund).

� Capital gearing ratio indicates the risk taking capacity of the company. Higher

ratio is risky, but profitable for the equity shareholders. On the other hand lower

ratio is safe, but not preferred by the equity shareholders. In the present case a

decline in this ratio indicates that the risk to the company has reduced, but this

might not go well with the shareholders.

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FINDINGS FOR COMPARISON OF EDELWEISS WITH

INDIA INFOLINE AND GEOJIT BNP PARIBAS:

� The Management efficiency ratios indicate that Edelweiss is doing better

than India Infoline in terms of gross profit and expenses, but it has also

done well in terms of net profit. On the other hand, Geojit BNP Paribas has

been incurring losses in 2009 due to reduction in sales because of which

Edelweiss has an upper edge over Geojit BNP Paribas.

� The Financial Stability ratios indicate that India Infoline hasn’t been

financially stable when compared to Edelweiss. This is because of the

amount of funds borrowed by India Infoline is quite high and also due to

increase in assets. In case of Geojit BNP Paribas, as the company has

incurred losses it hasn’t borrowed any loans because of which it is

financially unstable as compared to Edelweiss.

� According to profitability ratios, India Infoline has better return on capital

employed than Edelweiss due to reduction of net profit for Edelweiss in

2009.Thus India Infoline is doing much better than Edelweiss in terms of

profit. Geojit BNP Paribas has not made any profit in 2009 indicating a

decrease in its earning capacity. Hence, Edelweiss has been more profitable

in 2009 compared to Geojit BNP Paribas.

� Edelweiss has been efficient than India Infoline and Geojit BNP Paribas in

most of the ratios. Edelweiss is more capable of collecting its debt as

compared to India Infoline and Geojit BNP Paribas, Edelweiss EPS is also

more than these two companies, so in all it can be said that edelweiss is

much better in terms of its overall efficiency as compared to India Infoline

and Geojit BNP Paribas.

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SCOPE FOR FUTURE ENHANCEMENTS:

� After the acquisition of Edelweiss with Anagram Securities Limited it has

increased its number of branches all over Mumbai. E.g.: In Mumbai it has

only 7 branches.

� The company’s future looks good after the acquisition & hope that it will do

good in the Broking sector.

� Within a span of short period of time i.e one year the company is able to

attract a good number of customers approximately 1,00,000.

� The company’s future looks good in long run because of in spite of

recession it was able to do very well as compare with other broking firms.

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RECOMMENDATIONS:

� Edelweiss has been doing well for quite some time now but lately due to

recession its net profit has been affected, so certain measures much be

taken by Edelweiss to cut down on its expenses.

� Edelweiss has been repaying the debts borrowed efficiently, therefore it

must continue to do so even in tougher times when the funds borrowed are

of higher amount.

� Through retail Edelweiss is doing average profit, hence Edelweiss can think

about going in for new ventures. They can introduce mutual funds and

allow it be handled online like their other features on the online trading

portal.

� Attracting customers is more of a concern for Edelweiss because of lot of

competition, so they need to come up with various schemes and plans

which will pool in more customers. These plans must be beneficial for the

customers which will make them give more references, thus increasing

customers for Edelweiss which in turn gives the company more revenue.

� The company’s customer service is very poor, as their main focus is

attraction of customers. The company prefers only target rather than

welfare for employees.

� The company’s stock price once reached to a peak height of Rs.1,500 per

share but at present it down to Rs.520 per share it shows the company has

doing well in past but because of recession the FII’s (Foreign Institutional

Investors) pull out lot of money, still it was able to sustain its market image.

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CONCLUSION:

� Edelweiss Capital Ltd. as a company has been successful since it moved into

retail in 2007 but post recession in 2008 the company suffered a setback as

a result of reduction in profit. On a positive note the company always

focuses on long term goals so it is sure to improve in the future and sustain

in the market for a longer time.

� In the last three years the earnings per share of Edelweiss Capital Ltd. has

shown a downward trend as a result of a fall in the market price of the

share. But with an aggressive and passionate sales trading team, they are

able to seamlessly execute complex trades, across the entire spectrum of

trading strategies.

� Edelweiss Capital Ltd. has been performing well when compared with some

of its competitors. The examples of India Infoline and Geojit BNP Paribas

show that even though Edelweiss has not done well in recent times it still

has a better position in the market. Some of the products and services

offered by Edelweiss are quite unique which gives them an upper edge over

other competitors.

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REFERENCES:

www.edelweiss.in

www.edelcap.com

www.indiainfoline.com

www.geojitbnpparibas.com

www.moneycontrol.com

www.investopedia.com

Fundamental Analysis of Edelweiss Broking Limited v/s IndiaInfoline & Geojit BNP Paribas

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