Broking biz to add 60% to revs: Religare Ent

Excerpts from Bazaar on CNBC-TV18 Watch the full show » Religare Enterp BSE | NSE 09/02/12 Are Mutual Funds betting on Religare Enterp?

Religare Enterprises , a financial services company in India offering a wide range of financial products and services, has listed at Rs 323.75, up 75% over its offer price of Rs 185.

Sunil Godhwani , CEO and MD of Religare Enterprises said majority of their revenues come from the broking business. He sees the broking business contributing close to 60% going forward and the rest would be comprised of 60% retail and 40% from i-banking.

Excerpts from CNBC-TV18's exclusive interview with Sunil Godhwani:

Q: Big listing for your stock at Rs 600. We are expecting that you'll deliver more than Rs 1,000 crore in revenues in FY09 is that possible?

A: I think everything is possible given the intention that we have and the track record that we have, but I think the time speaks for itself rather than forecasting any numbers at this point.

Q: By FY09 can you break up your revenue streams for us between various businesses - institutional, retail and other investment banking or wealth management products that you maybe be offering and where will be most of the revenues be coming from?

A: At present majority of our revenues have come from the broking side whether institutional, retail or HNIs. However the institutional is a pretty small percentage at this point. And in the next 18 to 24 months, we are very confident that the broking business will contribute close to about 60% and 40% of the business will come from the other businesses like the i-banking, institutional and the commodity business services and the other verticals that we have created.

Q: What kind of EBITDA margins do you think you'll hold; as a company you have been doing about 37%? Do you think you will up it significantly or will it hover around this 40% mark?

A:  We are spending a lot on infrastructure at this point. We intend to also develop infrastructure in the few years to come, so I'll be very happy if we can sustain those margins and increase them as we go along.

Q: Specific to the retail PMS side how much of an increase do you expect in the turnover and market share for Religare?

A: There is no published data today to see how much market share we actually hold or there is no publicly available data, but we hope that we will be among the top leading players in the country in that segment going ahead.

And definitely retail is going to be a very large part of that.

Q: What is your primary positioning? Are you going to be largely a retail play with institutional business? Is that where your thrust would be to roll out retail infrastructure and increase penetration?

A: Our positioning is to make ourselves a globally trusted financial brand. May that be in the retail side, in the institutional side or in the wealth management spectrum.

We have just done a JV with the Macquarie Bank on the wealth management side. So we look at the entire financial services arena as one gain for us. We are going to focus on each vertical, but overall we want to excel in each and every vertical.

Q: You are quite strong on the Northern half of the country, by when do you expect to become a fairly dominant player in other parts or other geographies?

A: I would like to amend the statement slightly - we have a very strong pan-India presence. We are very strong in South, an equal presence there as much as in the North today. Infact majority of our turnover does come from tier II, tier III cities and close to 50% of that comes from South and the Eastern regions.

We have a very strong pan-India presence and we will continuously work to build that presence.

Q: You got a phenomenal response for your subscription figures. Some of your peers like Edelweiss have got similar triple digit subscription figure.

What is it that you see as the inflexion point for the brokerage industry from here on? Is it that turnover and volume for each brokerage are going to jump up or that you are going to start seeing an intended price increase as well that you can push through?

A: I think the financial sector is coming of age. The financial services sector as a whole is going to grow, there is a huge middle class income, which is growing. Disposable income is growing and there is a need to offer various products.

With the right platform and the right system, you are able to offer variety of products to the investors whether in equity or debt and that will be the story going ahead. I'm a strong believer that the next few years in India are going to be for the services sector and more so for the financial services sector.

Q: Has your nod for the asset management business come through from the Sebi?

A: We have the application and it's with the regulator. We are expecting a nod early, but it has not come through as of now.