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Is Geojit Ready to Outshine the Giants? A Deep Dive into India's Rising Broker


geojit financial services limited

Geojit Financial Services India: Is the Bull Running or Resting?

I. Overall Rating & Recommendation:

Rating: 6.5/10 (Hold with Moderate Optimism)

Recommendation: Geojit offers potential for moderate long-term growth, but near-term uncertainties remain. Holding existing shares is reasonable, while initiating new purchases might be better delayed until the stock demonstrates sustained momentum and macroeconomic headwinds subside.

II. Company Analysis:

Sector: Financial Services (Broking & Distribution)

Market Cap (as of Jan 11, 2024): ₹1,999.24 Crore

Current CMP: ₹83.07

Products: Geojit's primary revenue streams are:

  • Brokerage commission (65% of revenue)

  • Distribution of financial products (20% of revenue)

  • Value-added services and other income (15% of revenue)

Financials:

  • Recent financial performance shows decent growth in income and profitability.

  • Debt-to-equity ratio is manageable at 0.27.

  • P/E ratio is in line with the sector average at 18.15.

  • Future predictions depend on market stability and expansion of value-added services.

III. Competitive Landscape:

  • Key competitors include Angel One, ICICI Securities, Motilal Oswal, IIFL, and others.

  • Geojit faces competition from large established players and discount brokers.

IV. Macroeconomic Factors:

  • Rising interest rates and market volatility could dampen investor sentiment.

  • Growth in retail participation in the stock market could benefit Geojit.

  • Regulatory changes in the financial services sector could impact profitability.

V. Technical Analysis:

  • Daily chart trend analysis indicates a sideways consolidation near current levels.

  • Breaking above ₹86.70 (52-week high) could signal a potential uptrend, while falling below ₹78 could lead to further downside.

VI. Future Predictions:

  • A CAGR of 8-12% could be achievable over the next 5 years if market conditions improve and Geojit successfully expands its client base and revenue streams.

  • Historical CAGR (past 5 years) for Geojit and its index have been positive, though volatile.

VII. Ratios:

  • Debt-to-equity ratio: 0.27

  • Shareholder ratios: ROE: 15.7%, ROA: 11.56%

  • Sortino ratio: 0.7 (moderately downside sensitive)

  • PEG ratio: 1.64 (fairly valued)

  • Price-to-sales ratio: 6.65 (higher than industry average)

  • Beta: 0.73 (less volatile than NIFTY)

VIII. Conclusion:

Geojit holds value but is not without risks. Monitor market trends, competitor actions, and the company's execution before making investment decisions.


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