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26-08-2022

Research Report

Incorporated in 2005, Orbis Financial is promoted by Mr. Atul Gupta who had 46% stake in the company as of March 31, 2021. Headquartered in Gurugram, the company operates as a custodial, market intermediary and provide fund accounting, professional clearing, depository services, share transfer, FPI registration and trustee services to a wide range of client segments, namely-PMS, FDI, FPI, DII, AIFs, and TMs. ORBIS is a ‘One stop solution’ offering various securities services to the entire array of financial investors and intermediaries taking its offering into a new league altogether. Orbis Financial commenced operation in FY2009 as a custodian of securities and a clearing member in all market segments registered with SEBI. In FY2019, the company received a licence for offering registrar and transfer agent services and trustee services from SEBI. The trustee services are offered through a wholly-owned subsidiary - Orbis Trusteeship Services Private Limited. company caters to 250 FPIs, 100 PMS, 50 AIF’s and 1500 high net worth individuals (HNI)/non-resident individuals (NRIs). During FY22, the Company has injected fresh capital paving the way to fuelling its growth. The Company has already commenced deploying this new capital expanding its business in various segments laying special emphasis on technology.

Highlights of Financial Performance:

· Revenue from operations has grown at a CAGR of 104% from FY19-21. In FY21 Revenue came in at ₹ 66.55 Cr.

· EBITDA Margin improved from 34.2% in FY19 to 35.3% in FY21.

· PAT has grown at a CAGR of 48.56 % from FY 19-21, in FY 21 Company reported Profit of ₹ 15.92 Cr. from ₹ 11.57 Cr.

· Company reported ROE of 10.27% in FY21 and ROCE of 18.82%.

· On consolidated basis company reported cash flow of ₹ 1226.65 Cr. and free cash flow of ₹ 1225.87 Cr. in FY 21.

Strengths:

1.Biggest strength of Orbis is its financial performance, company revenue is growing at a healthy pace, and their profits margin are also increasing.

2.Capital Market trend in India is gaining traction, runway for growth is huge as only 6-7% of the people have demat account in India which will gain momentum going forward.

3.They have quiet a diversified client base as their dependence on single client is low.

Risks:

1.This type of business has lumpy performance as they are dependent on the market performance, in downcycle revenue of custodian or market related services also fall.

2.The industry remains dominated by bank custodians, particularly the FPI segment which accounts for 34% of the overall industry AUC in the country, given their size it gives advantages to established franchises.

OUTLOOK:

Orbis Financial is a SEBI-registered custodian and which primarily offers end-to-end capital market related services such as custodial, fund accounting, clearing, depository, trusteeship and other allied services. It is also a professional clearing member and offers clearing services primarily to FPI and trading members. Orbis largely caters to institutional clients like FPI, PMS, (FDI), DII, and AIFs, particularly through its custodial business, and also provides clearing services to TMs and FPIs. Its net operating income mainly comprises treasury-related income followed by custodial & clearing income. The company’s fee income remains annuity based (depending on AUC) and transaction oriented linked to clearing volumes. Orbis is constantly growing at a healthy pace over the years, they recently raised equity which will further help them in growth. However, given the intense competitive pressure as well as the established presence of incumbents, the company’s cost of client acquisition remains high their cost to Income ratio also remains high at around 75%, company need to control their cost and their performance is vulnerable to market performance.

                                                                             Financial of Orbis Financial                                                        ₹ in Cr.

Particulars

2021

2020

2019

Revenue from Operation

66.55

33.72

15.92

Other Income

19.97

10.16

6.53

Total Income

86.53

43.88

22.45

Expenses

Employee Expenses

20.25

10.53

8.03

Other Expenses

35.71

9.62

3.52

Total Expenses

55.96

20.15

11.55

EBITDA

10.60

13.57

4.37

EBITDA Margin

15.9%

40.2%

27.4%

Depreciation

1.15

0.89

0.57

EBIT

9.45

12.68

3.80

Interest

9.93

6.51

1.29

Profit Before Tax

19.49

16.34

9.04

Tax Expenses

3.57

4.76

1.83

PAT

15.92

11.58

7.21

Net Profit Margin

23.92%

34.33%

45.31%

EPS

1.99

1.77

1.10

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