Edelweiss Financial Services (EDEL) reported earnings of Rs 2.36 bn (+52% y-o-y, +13% q-o-q) were ~10% ahead of our estimates, led by strong credit book growth and continued momentum in the franchise business. Balance sheet expansion was led by retail credit, whose share in the total portfolio increased to 39% during the quarter. Key non-lending segments like wealth management, asset management and capital markets continued to be bolstered by capital market tailwinds and saw improving cost metrics. Maintain Buy. Credit business: mix shifting towards retail \u2014 EDEL\u2019s credit book, at Rs 361 bn, expanded faster than expected (45% y-o-y, 11% q-o-q). There was a distinct pickup in momentum on the retail portfolio, which grew 82% y-o-y, led by retail mortgage and loan against shares. Corporate credit growth was relatively measured, at 20% y-o-y, in line with EDEL\u2019s strategy of driving incremental growth through their funds rather than their own balance sheet. Operational metrics remained steady, with reported NIMs stable at 7.5% and cost-income (9M18) steady at 35%. Asset quality was comfortable with GNPA ratio flat q-o-q at 1.74% \u2014 though provision coverage declined modestly to 82%. Franchise business: capital market tailwinds \u2014 EDEL\u2019s non-lending businesses continued to be buoyed by capital markets activity. Wealth management AUAs grew 58% y-o-y (11% q-o-q) and cost-income ratio fell further to 66%. EDEL\u2019s recent acquisition of Religare Securities should help improve the profitability and breadth of this business further. Capital Markets and Asset management businesses also continued to see healthy trends. Overall franchise business operating efficiency improved further, with CIR now at 66%. Implications: EDEL continues to gain from its diversified financial services positioning. Strong balance sheet growth, coupled with improving cost metrics in non-lending businesses are likely to drive EDEL\u2019s robust earnings profile.