Edelweiss Cap will deserve premium valuations

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Edelweiss Cap will deserve premium valuations

There is a scramble to own a brokerage business in India and there is no doubt that Edelweiss will get very well subscribed. The business is good; the promoters are good.

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Q: Edelweiss Capital is opened up today we saw what happened with Motilal, Religare how does this one shape up in the brokerage lot?

A: CNBC-TV18's stocks editor, Udayan Mukherjee - There is a scramble to own a brokerage business in India and I have no doubt that Edelweiss will get very well subscribed. The business is good; the promoters are good. They have got a healthy mix of the institutional business, i-banking, wealth management and they do a little bit of probe book on the side as well. It's an interesting mix institutional therefore slightly premium kind of end not very visible or present in the retail end of the market; very good margin profile at 55%-57%, more than that actually 58%.

I think it will deserve a command slightly premium valuations compared to some of these pure retail brokers. I'm sure you are looking at more marketcap on listing otherwise you won't be buying. So just at the top end of the price band is Rs 6,000 crore marketcap, which they want. Not inexpensive especially when you consider that Motilal get some marketcap of Rs 4,000 crore from the market and India Infoline slightly under Rs 6,000 crore. So it's a premium valuations, good story, will get subscribed and will probably make a little bit of money. But again to keep the pricing in mind as well at the back of your mind somewhere.