Edelweiss Financial Services Ltd reported a 73.53% rise in net sales to Rs. 12092.50 million for the fourth quarter of fiscal year 2015 compared to the same period last year. Net profit increased 45.61% to Rs. 883.70 million. Operating profit grew 77.56% to Rs. 7415.30 million. The company recommended a final dividend of Rs. 0.20 per share. Estimates show net sales and profit are expected to grow at a compound annual rate of 26% and 28% from 2014 to 2017. The document provides the company's financial highlights and performance updates for the fourth quarter of fiscal year 2015.

1. CMP 60.90
Target Price 73.00
ISIN: INE532F01054
MAY 18th
, 2015
EDELWEISS FINANCIAL SERVICES LTD
Result Update (CONSOLIDATED): Q4 FY15
BUYBUYBUYBUY
Index Details
Stock Data
Sector Other Financial Services
BSE Code 532922
Face Value 1.00
52wk. High / Low (Rs.) 82.25/34.20
Volume (2wk. Avg. Q.) 300000
Market Cap (Rs. in mn.) 48220.62
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS FY15A FY16E FY17E
Net Sales 38797.90 47333.44 55380.12
EBITDA 24130.70 29219.64 34172.86
Net Profit 3287.00 3751.46 4405.09
EPS 4.15 4.74 5.56
P/E 14.67 12.85 10.95
Shareholding Pattern (%)
1 Year Comparative Graph
EDELWEISS FINANCIAL SERVICES LTD BSE SENSEX
SYNOPSIS
In Q4 FY15, Edelweiss Financial services Ltd Net
profit jumps to Rs. 883.70 million an increase of
45.61% against Rs. 606.90 million in the
corresponding quarter of previous year.
The company’s net sales registered 73.53% increase
in Q4 FY15 and stood at a record Rs. 12092.50
million from Rs. 6968.50 million over the
corresponding quarter of previous year.
During the Q4 FY15 operating profit is Rs. 7415.30
million as against Rs. 4176.30 million in the
corresponding period of the previous year, grew by
77.56%.
Profit before tax (PBT) at Rs. 1440.30 million in Q4
FY15 compared to Rs. 1042.00 million in Q4 FY14,
registered a growth of 38.22%.
Fund based income is Rs. 9240 million for Q4 FY15
which was Rs. 5450 million in Q4 FY14, up 70%.
Fee & Commission income is Rs. 1800 million for Q4
FY15 compared to Rs. 1,000 million for Q4 FY14, up
by 80%.
Edelweiss Financial Services Ltd has recommended
payment of Final Dividend of Rs. 0.20/- per share
for the financial year 2014-15.
SME financing business includes loans to small and
medium enterprises for their business
requirements and had an outstanding of Rs. 7620
million at the end of FY15 compared to Rs. 4030
million at the end of FY14.
Gross premium increased to Rs. 860 million in Q4
FY15 compared to Rs. 500 million in Q4 FY14.
Net Sales and PAT of the company are expected to
grow at a CAGR of 26% and 28% over 2014 to
2017E respectively.
PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
Edelweiss Financial Services ltd 60.90 48220.62 4.15 14.67 1.53 100.00
Weizmann Forex Ltd. 266.00 3076.10 16.27 16.35 3.77 75.00
Shriram City Union Finance Ltd 1762.30 116147.30 84.68 20.81 3.35 150.00
Cholamandalam Investment&Finance 598.00 85951.70 30.90 19.35 3.76 35.00

2. Analysis & Recommendation - ‘BUY’
For the 4th quarter of accounting year 2014-15, Edelweiss Financial services Ltd posted a 73.53% growth in net
sales to Rs. 12092.50 million from Rs. 6968.50 million in previous year period. Profit before tax (PBT) at Rs.
1440.30 million in Q4 FY15 compared to Rs. 1042.00 million in Q4 FY14, registered a growth of 38.22%. Net
profit jumps to Rs. 883.70 million against Rs. 606.90 million in the corresponding quarter ending of previous
year, an increase of 45.61%. Operating profit is Rs. 7415.30 million as against Rs. 4176.30 million in the
corresponding period of the previous year, registered a growth of 77.56%.
Edelweiss’ presence covers 240 offices in 125 cities including eight international offices. Together with a strong
network of nearly 4,800 Authorized Persons and Sub-brokers, Edelweiss presence covers almost all major towns
and cities in India catering to over 572,000 clients. Gross Premium income from Life Insurance business is Rs.
1930 million for FY15 compared to Rs. 1110 million in FY14, up 74%. Fee & Commission income is Rs. 5730
million for FY15 compared to Rs. 3560 million in FY14, up 61%. Fund based income is Rs. 31000 million for FY15
which was Rs. 20620 million in FY14, up 50%. Institutional Broking business continued to be among the market
leaders and perform in line with the industry. The company’s Research covers 208 stocks across 24 sectors
representing over 75% of market capitalization. Edelweiss has constantly pursued the strategy of synergistic
diversification of its businesses to become a large and respected Financial Services firm with businesses across
all growth areas in the financial services sector. We expect that the company surplus scenario is likely to
continue for the next three years, will keep its growth story in the coming quarters also. Hence, we recommend
‘BUY’ for ‘Edelweiss Financial Services Ltd’ with a target price of Rs. 73.00 on the stock.
QUARTERLY HIGHLIGHTS (CONSOLIDATED)
Results updates- Q4 FY15,
The company has achieved a turnover of Rs. 12092.50 million for the 4th quarter of the financial year 2014-15 as
against Rs. 6968.50 million in the corresponding quarter of the previous year. EBITDA of Rs. 7415.30 million in
Q4 FY15 and increase of 77.56% against the corresponding period of last year. In Q4 FY15, net profit of Rs.
883.70 million against Rs. 606.90 million in the corresponding quarter of the previous year. The company has
reported an EPS of Rs. 1.12 for the 4th quarter as against an EPS of Rs. 0.79 in the corresponding quarter of the
previous year.
Rs. In million Mar-15 Mar-14 % Change
Net Sales 12092.50 6968.50 73.53
PAT 883.70 606.90 45.61
EPS 1.12 0.79 41.42
EBITDA 7415.30 4176.30 77.56

3. Break up of Expenditure
Latest Updates
• The company has recommended payment of Final Dividend of Rs. 0.20/ - per share (on the face value of Rs.
1/-) for the financial year 2014-15.
• CRISIL Limited, has assigned the rating of 'CRISIL A1+' (CRISIL, A one plus) to the proposed issue of Short
Term Debt Issue of Rs. 25 billion of the Company.
• ICRA Limited has assigned the rating of '[ICRA] A1+' (ICRA A one Plus) to the proposed issue of Commercial
Papers of Rs. 1,500 crores of the Company.
• Credit Analysis & Research Limited has assigned the rating of 'CARE A1+' (A One Plus) to the proposed issue
of commercial paper of Rs. 6,350 crores of the Company.
• Fund based income is Rs. 31,000 mn for FY15 against Rs. 20,620 mn in FY14, up 50%, and for Q4 FY15 it is
Rs. 9240 mn which was Rs. 5450 mn in Q4 FY14 up 70%.
• Credit business of Edelweiss offers five broad products – Mortgages including housing finance, loan against
property and real estate finance, Structured Collateralised Credit to corporates, Distressed Assets Credit, SME
and Agri financing, and Loan against securities, rural finance & other loans. Total credit book of the group
stands at Rs. 150360 mn at the end of this year compared to Rs. 89530 mn at the end of previous year, a
growth of 68%.
• Edelweiss Tokio Life Insurance Company (ETLI) is one of the fastest growing life insurance companies in
India. Gross premium increased to Rs. 860 million in Q4 FY15 compared to Rs. 500 million in Q4 FY14. The
gross premium for FY15 is Rs. 1930 million compared to Rs. 1110 million in the corresponding period last
year. ETLI funds have been rated top performers by Morningstar. 5 of 6 individual ULIP funds have been
rated 5 Star as on March 31, 2015.
Break up of Expenditure
(Rs. In millions)
Q4 FY15 Q4 FY14
%
Change
Employee Benefit Expenses 2239.20 1298.20 72%
Depreciation & Amortization 197.70 147.30 34%
Changes in L.I policy liability 690.60 298.30 132%
Other Expenses 1805.00 1205.30 50%

4. • SME financing business includes loans to small and medium enterprises for their business requirements and
had an outstanding of Rs.7620 mn at the end of FY15 compared to Rs. 4030 mn at the end of FY14.
• Retail Financial Market business continued to scale up its market share with the total retail client base over
4,55,000 (4,27,000 at the end of FY14). The AuAs of the Wealth Management business were around Rs.
100000 mn at the end of FY15 against Rs. 48000 mn at the end of FY14. The customized research for retail
clients covers 54 Indian companies across 11 sectors.
COMPANY PROFILE
Edelweiss is one of India’s leading diversified Financial Services Groups. Edelweiss offers a large range of
products and services spanning across asset classes and consumer segments. Its businesses are broadly divided
into Credit Business (including Mortgages, Structured Collateralised Credit, Retail Finance, Distressed Assets
Credit and Agri Finance), Agency Business (including Financial Markets, Asset Management and Commodity &
Agri Services), Life Insurance andBalance Sheet Management Unit operations.
The group’s research driven approach and proven history of innovation has enabled it to foster strong
relationships across corporate, institutional and individual clients. The group has sizeable presence in large retail
segment through its businesses such as Life Insurance, Housing Finance, Mutual Fund and Retail Broking. It
serves its 5,72,000 strong client base through 5,555 employees and 240 offices (including eight international
offices) in 125 cities. Together with over 4,800 strong network of Sub-Brokers and Authorized Persons,
Edelweiss group has presence across all major cities in India.
Products
Credit
• Corporate credit
• Retail credit
• Fixed income
• Housing finance
Financial Markets and Asset Management
• Investment Banking
• Institutional Broking
• Insurance Advisory
• Mutual Funds
• Wealth management
• Retail broking
• Financial planning
• Alternative
Life insurance
• Edelweiss Tokio Life
Commodities
Edelweiss set up its commodities business about 6 years ago in order to diversify across adjacent asset classes.
The expected financialisation of commodities markets in India will act as a growth driver for this strategically
important business. This business sources, distributes and deals in agri commodities and precious metals.

5. FINANCIAL HIGHLIGHT (CONSOLIDATED) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as at March 31, 2014 -2017E
FY14A FY15A FY16E FY17E
I. EQUITY AND LIABILITIES:
A. Shareholders’ Funds
a) Share Capital 769.00 791.80 791.80 791.80
b) Reserves and Surplus 28132.40 30771.50 34522.96 38928.05
Sub-Total-Net worth 28901.40 31563.30 35314.76 39719.85
B. Minority Interest 3657.00 3708.80 3857.15 3934.30
C. Share application money pending allotment 0.10 42.40 0.00 0.00
D. Non-Current Liabilities:
a) Long-term borrowings 35503.50 80978.00 95554.04 107976.07
b) Other Long Term Liabilities 269.30 422.00 540.16 626.59
c) Long Term Provisions 1401.90 2986.20 3732.75 4292.66
Sub-Total-Long term liabilities 37174.70 84386.20 99826.95 112895.31
E. Current Liabilities:
a) Short-term borrowings 87256.80 135830.00 152129.60 165821.26
b) Trade Payables 8722.90 13147.90 15120.09 16329.69
c) Other Current Liabilities 14827.10 33100.50 40713.62 46413.52
d) Short Term Provisions 1363.70 3030.40 3575.87 4004.98
Sub-Total-Current Liabilities 112170.50 185108.80 211539.17 232569.45
TOTAL-EQUITY AND LIABILITIES (A+B+C+D+E) 181903.70 304809.50 350538.03 389118.91
II. ASSETS:
F. Non-Current Assets:
a) Fixed Assets 5343.90 6658.50 7610.67 8447.84
b) Non Current Investments 8724.10 16026.60 18270.32 20280.06
c) Deferred tax assets (Net) 517.60 974.00 1227.24 1435.87
d) Long Term Loans and Advances 41178.80 67345.60 78120.90 87495.40
e) Other non-current assets 3557.90 10224.40 12371.52 14227.25
Sub-Total-Non-Current Assets 59322.30 101229.10 117600.65 131886.42
G. Current Assets:
a) Current Investments 12539.00 11896.20 12491.01 12990.65
b) Inventories 37910.10 87087.40 98517.23 108330.26
c) Trade Receivables 4203.00 4347.20 4608.03 4838.43
d) Cash and Bank Balances 19637.10 23652.60 26963.96 30199.64
e) Short Term Loans and Advances 43151.10 67363.80 78815.65 87485.37
f) Other Current Assets 5141.10 9233.20 11541.50 13388.14
Sub-Total-Current Assets 122581.40 203580.40 232937.38 257232.49
TOTAL-ASSETS (F+G) 181903.70 304809.50 350538.03 389118.91

6. Annual Profit & Loss Statement for the period of 2014 to 2017E
Value(Rs.in.mn) FY14A FY15A FY16E FY17E
Description 12m 12m 12m 12m
Net Sales 25338.00 38797.90 47333.44 55380.12
Other Income 93.20 140.10 156.91 169.46
Total Income 25431.20 38938.00 47490.35 55549.59
Expenditure -9409.50 -14807.30 -18270.71 -21376.73
Operating Profit 16021.70 24130.70 29219.64 34172.86
Interest -12106.70 -18315.40 -22161.63 -25929.11
Gross profit 3915.00 5815.30 7058.01 8243.75
Depreciation -524.10 -716.40 -845.35 -972.15
Profit Before Tax 3390.90 5098.90 6212.66 7271.59
Tax -1346.10 -2017.00 -2478.85 -2886.82
Profit After Tax 2044.80 3081.90 3733.81 4384.77
Minority Interest 33.50 23.70 2.50 2.75
Share of Profit & Loss 124.10 181.40 15.15 17.57
Net Profit 2202.40 3287.00 3751.46 4405.09
Equity capital 769.00 791.80 791.80 791.80
Reserves 28132.40 30771.50 34522.96 38928.05
Face value 1.00 1.00 1.00 1.00
EPS 2.86 4.15 4.74 5.56
Quarterly Profit & Loss Statement for the period of 30 Sep, 2014 to 30 Jun, 2015E
Value(Rs.in.mn) 30-Sep-14 31-Dec-14 31-Mar-15 30-Jun-15E
Description 3m 3m 3m 3m
Net sales 9045.60 9591.80 12092.50 13180.83
Other income 49.50 12.10 57.60 33.41
Total Income 9095.10 9603.90 12150.10 13214.23
Expenditure -3519.30 -3627.40 -4734.80 -5087.80
Operating profit 5575.80 5976.50 7415.30 8126.43
Interest -4222.80 -4457.90 -5777.30 -6355.03
Gross profit 1353.00 1518.60 1638.00 1771.40
Depreciation -173.10 -195.00 -197.70 -205.61
Profit Before Tax 1179.90 1323.60 1440.30 1565.80
Tax -449.60 -574.00 -556.50 -618.49
Profit After Tax 730.30 749.60 883.80 947.31
Minority Interest 7.70 16.30 -0.60 -0.59
Share of Profit & Loss 54.40 62.70 0.50 0.90
Net Profit 792.40 828.60 883.70 947.62
Equity capital 777.60 787.60 791.80 791.80
Face value 1.00 1.00 1.00 1.00
EPS 1.02 1.05 1.12 1.20

7. Ratio Analysis
Particulars FY14A FY15A FY16E FY17E
EPS (Rs.) 2.86 4.15 4.74 5.56
EBITDA Margin (%) 63.23 62.20 61.73 61.71
PBT Margin (%) 13.38 13.14 13.13 13.13
PAT Margin (%) 8.07 7.94 7.89 7.92
P/E Ratio (x) 21.26 14.67 12.85 10.95
ROE (%) 7.08 9.76 10.57 11.04
ROCE (%) 10.91 10.00 10.62 11.21
Debt Equity Ratio 4.25 6.87 7.01 6.89
EV/EBITDA (x) 9.36 10.00 9.20 8.54
Book Value (Rs.) 37.58 39.86 44.60 50.16
P/BV 1.62 1.53 1.37 1.21
Charts

8. OUTLOOK AND CONCLUSION
At the current market price of Rs. 60.90, the stock P/E ratio is at 12.85 x FY16E and 10.95 x FY17E
respectively.
Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs.4.74 and Rs.5.56
respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 26% and 28% over 2014 to 2017E
respectively.
On the basis of EV/EBITDA, the stock trades at 9.20 x for FY16E and 8.54 x for FY17E.
Price to Book Value of the stock is expected to be at 1.37 x and 1.21 x respectively for FY16E and FY17E.
We expect that the company surplus scenario is likely to continue for the next three years, will keep its
growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of
Rs.73.00 for Medium to Long term investment.
INDUSTRY OVERVIEW
India has a diversified financial sector, which is undergoing rapid expansion. The sector comprises commercial
banks, insurance companies, non-banking financial companies, co-operatives, pension funds, mutual funds and
other smaller financial entities. The financial sector in India is predominantly a banking sector with commercial
banks accounting for more than 60 per cent of the total assets held by the financial system.
India's services sector has always served the country’s economy well, accounting for about 57 per cent of the
gross domestic product (GDP). In this regard, the financial services sector has been an important contributor.
The Government of India has introduced reforms to liberalise, regulate and enhance this industry. At present,
India is undoubtedly one of the world's most vibrant capital markets. Challenges remain, but the future of the
sector looks good. The advent of technology has also aided the growth of the industry. About 75 per cent of the
insurance policies sold by 2020 would, in one way or another, be influenced by digital channels during the pre-
purchase, purchase or renewal stages, as per a report by Boston Consulting Group (BCG) and Google India.
India is today one of the most vibrant global economies, on the back of robust banking and insurance sectors. The
country is projected to become the fifth largest banking sector globally by 2020, as per a joint report by KPMG-
CII. The report also expects bank credit to grow at a compound annual growth rate (CAGR) of 17 per cent in the
medium term leading to better credit penetration. Life Insurance Council, the industry body of life insurers in the
country also projects a CAGR of 12–15 per cent over the next few years for the financial services segment.

9. Also, the relaxation of foreign investment rules has received a positive response from the insurance sector, with
many companies announcing plans to increase their stakes in joint ventures with Indian companies. Over the
coming quarters there could be a series of joint venture deals between global insurance giants and local players.
Disclaimer:
This document is prepared by our research analysts and it does not constitute an offer or solicitation for the
purchase or sale of any financial instrument or as an official confirmation of any transaction. The information
contained herein is from publicly available data or other sources believed to be reliable but we do not represent that
it is accurate or complete and it should not be relied on as such. Firstcall Research or any of its affiliates shall not be
in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. Firstcall Research and/ or its affiliates and/or employees will not be liable for
the recipients’ investment decision based on this document.

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