Leading diversified group Edelweiss Financial Services Ltd said on Friday its consolidated profit after tax was down by 93 per cent to Rs 17 crore in Q3 FY20 from Rs 226 crore in the corresponding period of previous fiscal.
It clocked revenues of Rs 2,650 crore in the quarter ended December, down from Rs 2,897 crore in Q3 FY19. In the same period, ex-insurance profit after tax totalled Rs 74 crore compared to Rs 273 crore in the previous fiscal's quarter.
The group's gross net worth at December-end was Rs 10,163 crore which included investments of CDPQ, Kora Management and Sanaka Capital in equity convertible instruments.
"In this quarter, we strengthened the balance sheet with the equity raised in our advisory businesses. This is the second equity raise after the first round of equity we raised in our credit business in 2019," said Chairman and CEO Rashesh Shah.
"Our debt-equity ratio is now a very conservative 2.9 times, giving us great headroom for future growth. Liquidity was ample throughout the quarter," he said in a statement.
The operating highlights of the quarter included 42 per cent growth in assets under management in the company's advisory business in spite of the credit dislocation.
To transition quickly to a retail dominated book, Edelweiss Financial reduced its corporate credit exposure by selling down part of its portfolio to funds.
"Reducing corporate credit exposure will remain a key focus area for us. The weak economic climate resulted in elevated credit costs which, along with the cost of managing liquidity, resulted in muted earnings," said Shah.
"We have created a separate vertical called Edelweiss Global Investment Advisors (EGIA) which will house all our advisory businesses. We will look to strengthen EGIA and make this more independent in the near future." Shah said he is encouraged by the determination with which the government and the Reserve Bank of India have focused on specific measures to help financial services companies by nudging the banking sector in terms of transmission of both liquidity and rate reductions.
"While we remain conservative in our immediate outlook, I am confident these concerted measures will bear fruit before long, and the current situation will reverse in two to three quarters," he added.
Edelweiss is a home-grown professional financial services group with more than 11,000 employees and two million customers.
