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Results Update: Edelweiss Capital Ltd.

Key factors from the results:

• Capital market volumes to remain muted for some time, while pressure on brokerage yield will continue to impact the core brokerage fee income.
• Anagram Capital acquisition to become effective from Q2FY11; consolidation will boost ECL's core brokerage revenue for FY11.
• Investment banking business expected to maintain a healthy growth over FY11-12; Scaling up of financing book to aid steady interest income growth.
• Operating margins improved sequentially during Q1FY11 at 31.8% from 28.6% in Q4FY10 while PAT margin improved to 22.3% from 20.2% in Q4FY10; consolidation of Anagram will further enhance bottom-line growth going forward.

Based on the above developments , the stock can be accumulated on declines with a price target of Rs. 55.

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