Share India Securities Ltd - High returns
High returns are available with high risk at a reasonable PE
Company Overview
Founded in 1984, Share India Securities Ltd is a financial service provider that uses technology to offer customized capital market tech-based solutions to clients. It offers financial products & personalized services, including equity broking, currency & commodity derivative, depository participant services, mutual fund advisory and distributorship, etc to retail and corporate clients
Share India Securities Limited (SISL) is a digital-first fintech conglomerate focused on cutting-edge low latency platform and AI/ML driven trading strategy solution provider to empower its proprietary and professional traders Clientele with superior technology.
Business segment
30% is coming from client business
around 10% comes from NBFC,
around 2% to 3% comes from various service-related businesses, including insurance, technology, and capital services
rest is proprietary trading
With 70% of the income coming in from proprietary trading, makes it a stock who are looking for high risk plays.
Share Details
NSE:SHAREINDIA
Quality: Returns on capital employed in cash
Given that 70% of the income is coming from from proprietary trading makes the return ratios look quite good
Growth
Since growth is primarily driven by proprietary trading, there can be questions around the sustainability of the growth.
Growth Momentum
Outlook
Looking at remarks made by the management during the Q4-23 earnings call, the company is guiding of 25-35% PAT growth in the next five years.
Since last 8 years, we are growing at 77% of CAGR like base is big now and a new set of challenges, we believe, if not 77%, at least we should grow between 25% to 35% CAGR in the next 5 years that is our goal
In coming years, as the scalability is there, we believe these margins are definitely going to go up only. There is no chance that margins will come down because we are not a much cost-heavy company.
So What????
If I own the stock, I may keep it based on my historic returns, future return expectations, and availability of alternative stock ideas. Its a high growth, high risk company and if I am sitting on historical returns then I may want to stay with it.
If I don’t own the stock, I may want to enter only if I am looking for something risky with high growth and available at PE of 14. This stock is not for the conservative investor. One should not invest a significant percentage of their capital in the company
Disclaimer
It is an analysis of the company data and not a stock recommendation
My analysis can be completely wrong and can change the next minute based on changes in my understanding of the company
I look to own good companies at prices where there is a path to market beating returns over decades