Hit in delivery volumes resulted in poor Q4 nos: Geojit BNP

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Hit in delivery volumes resulted in poor Q4 nos: Geojit BNP

In an interview with CNBC-TV18, CJ George, managing director of Geojit BNP Paribas, spoke about the results and the road ahead for the company.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See latest News about Geojit BNP See previous management interviews See what other Experts & Brokerages are saying about Geojit BNP Geojit BNP BSE | NSE 30/05/12 Are Mutual Funds betting on Geojit BNP?

Retail broking firm Geojit BNP Paribas' fourth quarter (January-March) net profit fell 61% year-on-year to Rs 2.11 crore, on the back of a 5% drop in revenues to Rs 58.56 crore, reflecting individual investors' apathy to the stockmarket. For the full year, revenues were down 8% to Rs 256.3 crore and net profit by 38% to Rs 28.39.

In an interview with CNBC-TV18, CJ George, managing director of Geojit BNP Paribas , spoke about the results and the road ahead for the company.

Below is an excerpt from the interview. For complete interview watch the accompanying video.

Q: Can you take us through what went wrong in this quarter? Was it specific to Geojit or Geojit BNP Paribas or because we have seen some shrinkage in volumes that impacted the entire industry?

A: Yes, it is certainly due to the impact on the volumes and particularly for Geojit. In fact, almost 70% of our brokerage revenue comes from the delivery business. If you look at the last few quarters, the delivery volumes have significantly come down whereas the trading volume has gone up. But trading volumes share is relatively low, so that has impacted the revenues and profit.

Q: There hasn't been drastic cut even in terms of cash market volume. If you take a look at year back numbers also, in the brokerage industry are we seeing wafer thin margins now? Have you also cut brokerage charges quite significantly from last three year because there has been quite a bit of competition?

A: As I told you 70% of our volumes come from delivery business where we have not seen any shrinkage of margins - it was only 1.5% or so. But in terms of the day trading as well as the futures & options (F&O) segment, where our volume is relatively low, there has been shrinkage in the margins.

Q: But in any case the margins in day trading and on futures trading anyway are not very significant. Even with exceedingly huge volumes I don't think brokerages are making too much money. So even if volumes did very well are brokerage margins shrinking rather drastically even in the F&O segment?

A: The F&O segment on current level, I don't anticipate further decline in the margins. But having said that I am of the view that what went wrong was basically in terms of the investor confidence in the market. So the delivery volume took a hit. That is where the margins got affected for most of the brokerage firms.