Quest Capital Markets Limited Q3FY23 Earnings; Fall in Revenue

Company Description:

The services offered by Quest Capital Markets Ltd. are primarily limited to NBFC and capital markets. The company is majorly engaged in corporate finance, investment banking distribution services and advisory services.

Revenue:

Quest Capital’s interest income has significantly decreased to ₹ 88.85 lakhs in Q3FY23 resulting in a 47% decrease on a YoY basis. The total revenue from operations for the company varies drastically quarter to quarter due to the erratic reception of the revenue from sale of shares and securities. In Q2FY23, the sale of shares and securities alone contributed to ₹ 780 lakhs of revenue for the firm as seen in the diagram below.

Expenses:

The biggest differentiator in the quarterly of the firm is the Changes in Inventories of finished goods, stock-in-trade and work-in progress aspect. This section of the expenses proves itself to be erratic as well in line with the revenue of the company. The quarterly dimension is presented below:

Changes in Inventories of finished goods, stock-in-trade, work-in progress	₹ Lakhs
Q3FY22	-63.69
Q2FY23	640.98
Q3FY23	-2.1

The Administrative and Other Expenses have decreased as well to ₹ 12.41 lakhs showcasing a 71.5% decrease on a YoY basis.

Profitability:

The Profit for the Period for the third quarter in FY23 has fared worse compared to previous quarters as it is evident from the discussion of revenues and expenses before. Compared to Q3FY22, the recent quarter has observed drastic reduction in interest income which resulted in the fallen profits. 

Compared to Q2FY23, the recent quarter observed no revenue from the sale of shares and securities. Due to the combination of the two factors, Q3FY23 has seen decreased profitability on both YoY & QoQ basis as shown in the diagram below:

Other Comprehensive Income:

Concerning the items that cannot be reclassified into Profit/Loss, the Changes in fair valuation of investments play a key role in completely switching the dynamics of the Total Comprehensive Income.

As seen above, the contribution of this metric in the Total Comprehensive Income changes the results altogether. Quest Capital operates in the capital markets and this metric indicates the volatile nature of the market.