India Infoline Group IIFL Group s Quarterly Results for Q4 FY13 May 11, 2013
I: IIFL Group Performance review FY13 II: IIFL Group Performance review Q4FY13 III: IIFL (NBFC) Performance review Annexure I: Corporate overview Annexure II: Industry update
Highlights of FY13 performance Profit more than double, income up 41% yoy Highest ever yearly income and Profit after Tax * at Rs 2,665 Cr and Rs 279 Cr respectively Income growth 41% yoy, drives net profit growth 105% yoy Consolidated group RoE improves to 15% Loan book grows steadily to Rs 9,375 Cr in FY13 from Rs 6,747 Cr in FY12 Loan assets predominantly retail, are fully secured with low NPA of 0.17% IIFL Wealth continues steady growth and has assets under advice of over Rs 40,000 Cr Equities trading volumes down 4% yoy but commodities volumes up 18% yoy Insurance and mutual fund distribution witness healthy growth IIFL won Best Customer Service in Financial Markets award organised by FranchiseIndia *Before providing for Minority interest, PAT after Minority interest is Rs 272 Cr IIFL Group Consolidated Performance Review
IIFL Group income and PAT at all time high in FY13 Profit after Tax (Rs Cr) Return on Equity (%) Before Minority interest 193 157 234 215 136 279 21.3 10.4 14.9 13.1 8.0 15.0 FY08 FY09 FY10 FY11 FY12 FY13 FY08 FY09 FY10 FY11 FY12 FY13 Total Income (Rs Cr) EBDTA Margin (%) Net of Intergroup 1,024 877 1,124 1,474 1,886 2,665 Net of Interest cost 30.4 29.5 36.3 25.2 14.8 18.2 FY08 FY09 FY10 FY11 FY12 FY13 FY08 FY09 FY10 FY11 FY12 FY13 IIFL Group Consolidated Performance Review
IIFL Group consolidated results for year ended Mar 13 Rs Cr FY13 FY12 YoY Broking and related income 552.5 545.8 1.2% Financing and Investing income 1,816.7 1,090.5 66.6% Marketing and Distribution income 288.9 243.1 18.8% Other income 7.2 7.2-0.5% Total Income 2,665.3 1,886.6 41.3% A. Operating cost 333.6 258.3 29.1% B. Employee cost 533.5 491.7 8.5% C. Other expenses 444.5 352.3 26.2% EBITDA 1,353.6 784.3 72.6% Interest 869.2 504.3 72.4% Depreciation and amortization 83.9 80.2 4.6% Profit / (Loss) before tax 400.4 199.8 100.7% Provision for taxation 121.1 63.5 90.7% Profit/(Loss) after tax before minority 279.3 136.3 105.3% Minority Interest 7.1 4.0 78.3% Profit/(Loss) after tax 272.2 132.3 106.1% IIFL Group Consolidated Performance Review
I: IIFL Group Performance review FY13 II: IIFL Group Performance review Q4FY13 III: IIFL (NBFC) Performance review Annexure I: Corporate overview Annexure II: Industry update
Mar 13 quarter profits up 73% yoy, income up 15% yoy Consistent profit growth, highest ever quarterly profits Income at Rs 734 Cr, up 5% qoq, up 15% yoy Profit after Tax * at Rs 84 Cr, up 12% qoq, up 73% yoy RoE stood at 17.2% for the quarter, annualized Loan book up 5% qoq from Rs 8,936 Cr in Q3FY13 and up 39% yoy from Rs 6,747 in Q4FY12 IIFL equity volumes up 6% qoq at Rs 5,477 Cr per day Commodities market volumes remained flat for the quarter Marketing and distribution income up 25% qoq and 8% yoy Operating efficiency improved; cost to income trending down IIFL Group Consolidated Performance Review
IIFL Group s net profit rising consistently for last 7 quarters Profit after Tax (Rs Cr) Return on Equity (%) Before Minority interest 67 75 84 Quarterly annualised 14.6 15.6 17.2 49 53 11.1 11.9 28 23 36 6.7 5.2 8.3 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Total Income (Rs Cr) Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 EBDTA Margin (%) Net of Intergroup 360 411 480 636 583 653 696 734 Net of Interest cost 16.0 14.3 13.2 15.6 17.4 17.8 19.3 18.1 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 IIFL Group Consolidated Performance Review
IIFL Group consolidated quarterly results for Mar 13 compared qoq and yoy Rs Cr Q4FY13 Q3FY13 Q4FY12 QoQ YoY Broking and related income 150.1 143.5 146.7 4.6% 2.3% Financing and Investing income 481.0 469.6 391.7 2.4% 22.8% Marketing and Distribution income 101.1 80.6 93.6 25.5% 8.0% Other income 1.6 2.1 3.7-23.1% -55.5% Total Income 733.7 695.7 635.6 5.5% 15.4% A. Operating cost 91.1 85.1 91.8 7.1% -0.8% B. Employee cost 133.9 135.7 157.5-1.3% -15.0% C. Other expenses 116.1 118.6 107.9-2.2% 7.6% EBITDA 392.7 356.3 278.4 10.2% 41.1% Interest 259.6 222.2 179.2 16.8% 44.9% Depreciation and amortization 17.1 27.6 26.6-38.2% -35.9% Profit / (Loss) before tax 116.0 106.6 72.5 8.9% 59.9% Provision for taxation 31.8 31.4 23.7-34.2% Profit/(Loss) after tax before minority 84.2 75.1 48.8 12.0% 72.5% Minority Interest 3.2 2.0 1.9 60.4% 66.4% Profit/(Loss) after tax 81.0 73.2 46.9 10.7% 72.7% IIFL Group Consolidated Performance Review
Despite equity markets upsurge, retail participation still low, IIFL strives to maintain market share Average daily turnover was at Rs 5,477 Cr in Q4FY13 up 6% qoq, marginally up yoy Market share on NSE was at 3.6% in Q4FY13 as compared to 3.7% in Q3FY13 Average daily commodities turnover was at Rs 1,621 Cr in Q4FY13, marginally up qoq and up 9% yoy Commodities market share was 3.1% in Q4FY13 Average daily turnover (Rs Cr) Avg Cash TO Avg FAO TO Avg Commodity TO Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 2.4 Commodity market share (%) 2.7 2.8 3.1 3.0 3.1 Equity market share on NSE (%) 3.7 3.8 3.8 3.7 3.4 3.6 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 IIFL Group Consolidated Performance Review
IIFL Research remains port of first call for fund managers, coverage further expanded Over 250 stocks under coverage Our in-depth, thematic research published during the quarter include India - Media: Assesses the progress of digitisation and highlights key risks to its timely and effective implementation The Winning Dozen: 12 stocks showing stellar performance India UID: Report shows how AADHAR has the right ingredients to reform India s entitlements regime in the long term IIFL Group Consolidated Performance Review
Jul/12 Aug/12 Sep/12 Oct/12 Nov/12 Dec/12 Jan/13 Feb/13 Mar/13 IIFL emerges as one of the leading player in wealth management and financial products distribution Assets under advice are over Rs 40,000 Cr Weighted annualized insurance premium income mobilization was Rs 324 Cr for FY13 IIFL distributes mutual fund on open architecture. IIFL Clients MF AUM is close to Rs 12,000 Cr Launched the first of its kind Category II Alternative Investment Fund (AIF) and collected Rs 627 Cr Closed the largest QFI transaction in India till date of US $110mn in Oct 12 With unprecedented tightening of regulatory framework on disclosure, commission etc, industry is undergoing consolidation; we remain sanguine for long term prospects MF Industry AUM (Rs Bn) 7,490 7,037 8,232 6,709 5,327 4,940 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 APE growth YoY 100 (%) Private Players LIC 50 16 1 5 0 (17) (7) (7) (6) (5) (13) (8) (26) (19) (17) (18) (50) (22) (27) (28) (53) (100) IIFL Group Consolidated Performance Review
I: IIFL Group Performance review FY13 II: IIFL Group Performance review Q4FY13 III: IIFL (NBFC) Performance review Annexure I: Corporate overview Annexure II: Industry update
NBFC s FY13 performance highlight Income up 82% yoy; PAT * up 79% yoy Income from Operations at Rs 1,653 Cr, up 82% yoy Profit before tax at Rs 274 Cr, up 82% yoy Profit after tax * at Rs 189 Cr, up 79% yoy Capital adequacy has improved to 21.6%, boosted by infusion of Tier-II capital Loan book grows steadily to Rs 9,375 Cr as on Q4FY13 from Rs 8,936 Cr in Q3FY13 Book exhibits high quality assets, with low net NPAs at 0.17% Net interest margin and spread remain healthy, driven by retail nature of book Borrowing profile gets more diversified; cost of funds trending down During the last four quarters, share of gold loan in financial assets has fallen from 41% to 35% IIFL NBFC Performance Review
IIFL Finance consolidated results for year ended Mar 13 Rs Cr FY13 FY12 YoY Income from operations 1,653.4 908.5 82.0% Other income 83.8 45.1 85.6% Total Income 1,737.2 953.6 82.2% A. Operating cost 170.7 62.2 174.3% B. Employee cost 179.5 109.3 64.2% C. Other expenses 201.7 137.1 47.1% EBITDA 1,185.4 645.0 83.8% Interest 877.6 479.8 82.9% Depreciation and amortization 34.0 15.0 127.2% Profit / (Loss) before tax 273.8 150.2 82.3% Provision for taxation 85.0 44.8 89.9% Profit/(Loss) after tax 188.7 105.4 79.1% IIFL NBFC Performance Review
Loan book is diversified and growing steadily, relative share of Gold Loan has fallen Loan portfolio in Q4FY13 steadily increased to Rs 9,375 Cr as against Rs 8,936 Cr in Q3FY13 Loan book comprises entirely secured lending against tangible collaterals Gold loan product s relative share is being brought down consciously, post RBI s tightening of norms Diversifying risk with multiple products against collaterals of mortgage, property, gold jewellery, medical equipment, shares etc Changing mix of financial assets Gold loan as a % of financial assets Financial assets as on Mar 31, 2013 Mortgage Loan 35% Other Financial Assets 15% FY13 assets breakup Medical Equipment 3% Gold Loan 35% Capital Market 12% 41.3 38.4 36.9 35.5 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Rs Cr A Loan Book 9,375 B Securitised /assigned portfolio/ NCD 655 C Other Financial Assets 1,513 D AUM (A+B) 10,030 E Total Financial Assets (A+C) 10,888 Other financial assets comprise cash, bank, fixed deposits, bonds, mutual funds investments etc IIFL NBFC Performance Review
NIM and spread maintained at healthy levels, supported by retail lending Retail book enjoys high spread and NIM with concomitant high operations cost NIM has tapered off in last quarter, with decline in share of Gold Loans 8.5 8.7 NIM (%) 10.2 10.5 9.2 7.9 With increasing leverage, divergence between spread and NIM is reducing Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 IIFL plans to remain focussed on retail business and maintain healthy NIM 6.0 6.9 Spread (%) 8.4 8.8 8.5 7.2 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 IIFL NBFC Performance Review
Cost of funds and cost to income are trending down IIFL has been successfully bringing down cost of funds with improving credit acceptability and expanding lenders base 12.3 Cost of Funds (%) 12.6 12.2 Cost to Income has been falling on the back of higher productivity from branches 11.7 11.7 11.7 IIFL focus is to take branches to optimum asset level, before embarking upon next phase of expansion Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Cost to Income (%) 63.0 64.7 58.4 52.8 51.1 48.6 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 IIFL NBFC Performance Review
IIFL s high asset quality is reflected in low NPAs and strong financials in robust capital adequacy IIFL s steadfast commitment to maintain high asset quality through superior credit processes is reflected in low NPA levels 16.4 Capital Adequacy (%) 20.6 17.9 16.2 22.6 21.6 IIFL provisioning is more conservative than statutory requirements Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Provision for the quarter Rs Cr % Net NPA (%) A Gross NPA 45.9 0.49% B Non Standard Asset Provision 30.1 0.32% C Net NPA (A-B) 15.8 0.17% D Standard Asset Provision 22.9 0.25% E Total Provision (B+E) 52.9 0.25 0.40 0.38 0.32 0.25 0.17 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 IIFL NBFC Performance Review
I: IIFL Group Performance review FY13 II: IIFL Group Performance review Q4FY13 III: IIFL (NBFC) Performance review Annexure I: Corporate overview Annexure II: Industry update
Vision and Strategy Vision To become the Most Respected Company in the financial services space 1 Business Strategy 2 Customer Strategy 3 People Strategy Continuously assimilate, analyse and apply knowledge to power superior financial decisions Focus on core competence in financial services Ensure de-risked business through multiple products and diverse revenue streams Drive stickiness through high quality research & service Maintain cutting-edge proprietary technology Wide, multi-modal network serving as one-stop shop to customers Attract exceptionally talented and driven people Ensure conducive merit environment Liberal ownership-sharing KNOWLEDE IS THE EDGE
Management team Team with impeccable academic and professional credentials Open door, transparent and performance oriented culture Liberal employee ownership Management Team Chairman Nirmal Jain Managing Director R. Venkataraman Institutional Equities H. Nemkumar Finance Dhruv Jain Investment Banking Nipun Goel Compliance R Mohan Consumer Finance Mukesh Kumar Singh Operations Narendra Jain PMS & Retail Broking Prasanth Prabhakaran Audit Kamal Ahuja Wealth Management Karan Bhagat Risk Upendra Jaiswal International Operations Bharat Parajia Human Resources Pallab Mukherji Offshore Asset Management Amit Shah Technology Tejas Mehta Insurance Distribution Mohammad Kantawala Corporate Compliance Sunil Lotke Verticals Corporate Functions
IIFL has attracted luminaries from the Indian financial world to guide the management A K Purwar Independent Director Former Chairman, State Bank of India Dr S Narayan Independent Director IAS (Retd), Former Finance Secretary A K Shukla Independent Director Former Chairman of LIC M N Singh Independent Director IPS (Retd), Former Commissioner of Police, Mumbai Sunil Kaul Non Executive Director Operating Partner, Carlyle Group C Ratnaswami Non Executive Director Managing Director of Hamblin Watsa (Fairfax Group, Canada) V K Chopra Independent Director Former Chairman & Managing Director of Corporation Bank Nilesh Vikamsey Independent Director Central Council Member, ICAI & Partner of M/s Khimji Kunverji & Co. R S Loona Independent Director Former Executive Director (Law) of SEBI Kranti Sinha Independent Director Former Chief Executive Officer of LIC Housing Finance Homai Daruwala Independent Director Former Chairperson & Managing Director of Central Bank of India P Pattanayak Independent Director Former Managing Director of State Bank of Mysore
Business model Equities, commodities broking Mutual funds distribution Insurance distribution Loans Wealth management Financial advisory Financing Our service offerings Equities Insurance Retail Affluent Credit & finance CUSTOMER SEGMENTS Wealth management Corporate Institutional Asset management Investment banking Investment banking Corporate debt Institutional equities Derivatives
How we differentiate ourselves Managerial depth Promoted by first generation professional entrepreneurs Highly qualified and experienced Management team Well-capitalized Group net worth of around Rs 2,000 Cr Significant unutilized capacity to leverage Distribution reach Present at close to 4,000 business locations across more than 900 cities in India Global footprint covers Colombo, Dubai, New York, Mauritius and Singapore Owner-mindset The top management is driven by pride and reward of ownership To think and work like an owner is part of organization s DNA Technology edge Uniquely placed with proprietary front, mid and back office software Effectively harnessed technology to provide superior customer experience De-risked De-risked and diversified business model across multiple revenue streams Multiple products across all segments of financial services
Recent awards and accolades received by IIFL ENTREPRENEUR OF THE YEAR (MR NIRMAL JAIN) - 2012 TOP PERFORMER EQUITY FI CATEGORY 2012 BEST BROKING HOUSE WITH GLOBAL PRESENCE 2011 & 2012 BEST WEALTH MANAGEMENT HOUSE INDIA 2011 & 2012 BEST MARKET ANALYST 2009 & 2012 IIFL Analyst receives Best Analyst award from then Finance Minister, Shri Pranab Mukherjee Mr R Venkataraman received the award on behalf of IIFL at the D&B Equity Broking Awards, 2012 BEST COMMODITIES INVESTMENT 2012
FLAME (IIFL s Financial Literacy Campaign) update Over 53,000 school students enrolled from over 200 schools across India for 2012-13 batch in the FLAME education programme FLAME meet being conducted at Kerala
I: IIFL Group Performance review FY13 II: IIFL Group Performance review Q4FY13 III: IIFL (NBFC) Performance review Annexure I: Corporate overview Annexure II: Industry update
Dec-06 Jul-07 Jan-08 Jul-08 Jan-09 Aug-09 Feb-10 Aug-10 Feb-11 Aug-11 Mar-12 Sep-12 Mar-13 2006 2007 2008 2009 2010 2011 2012 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13ii Macro economy Growth may remain below trend Until recently, widening current account deficit has generally meant faster growth 6.7 Real GDP growth (YoY) 9.3 8.6 6.2 5.0 6.0 FY09 FY10 FY11 FY12 FY13ii FY14ii 10% 9% 8% 7% 6% 5% 4% 3% 2% Real GDP growth (LHS) (3yr Cagr) Current account deficit (RHS) -5% (% of GDP, 3yr avg) -4% -3% -2% -1% 0% 1% 2% 3% (YoY %) 12% 8% 4% 0% -4% Near term Inflation is coming off due to base effect WPI - Overall WPI - Core inflation Monsoon is the key driver of near term growth 20 Agri GDP growth (LHS) 15 (%) 10 5 0 (5) (10) (15) (20) (YoY Monsoon deviation from average (RHS) 5 0 (5) (10) (15) (20) (25)
FY06 FY07 FY08 FY09 FY10 FY11 FY12 Dec-06 Jun-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Aug-10 Feb-11 Aug-11 Feb-12 Sep-12 Mar-13 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Aug-08 Feb-09 Aug-09 Feb-10 Aug-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Credit and Finance Credit growth to nominal GDP has been relatively sluggish Loan deposit ratio has structurally moved up Credit growth relative to nominal GDP 2.7 1.7 1.4 1.4 1.1 1.1 Average 1.1 1.2 90 80 70 60 50 40 30 20 10 0 (%) Loan-deposit ratio Investment-deposit ratio PSU banks steadily losing market share in the credit market 30 % Reserve ratios - CRR and SLR trend (%) 80 70 60 50 40 30 20 10 0 Market share in outstanding credit PSUs Private sector Foreign 25 20 15 10 5 0 CRR SLR
Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 July-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Capital raising and fund flows Capital raised through QIPs (Rs bn) Capital raised through IPOs (Rs bn) 500 400 300 200 100 - (Rs bn) (Rs bn) Capital raised via QIP's Average Deal Size (rhs) 380 7 6 257 246 5 5 50 2 2 22 2 1 45 FY07 FY08 FY09 FY10 FY11 FY12 FY13 10 8 6 4 2 - (Rs bn) 500 400 300 200 100 - Capital raised via IPO's 426 327 6 5 248 4 22 1 Average Deal Size (rhs) 333 6 (Rs bn) 10 8 6 4 58 70 3 2 2 FY07 FY08 FY09 FY10 FY11 FY12 FY13 - Net FII flows (US$bn) FDI inflows (US$bn) 8.0 6.0 4.0 2.0 0.0-2.0-4.0-6.0 Net FII flows (US$bn) Average US$ rate (rhs) (Rs/US$) 35 38 41 44 47 50 53 56 59 Net FDI inflows (US$bn) 1Q 2Q 3Q 4Q FY08 FY09 FY10 FY11 FY12 FY13
Thousands Jul/12 Aug/12 Sep/12 Oct/12 Nov/12 Dec/12 Jan/13 Feb/13 Mar/13 20 16 12 8 4 0 Insurance and Mutual funds (as % of banking assets) Modest increase in non banking system Fixed income AUM of mutual funds 15 16 15 15 15 15 5,327 6 Fixed income investments of insurance companies 4 Average AUM for the Quarter (Rs bn) 6 5 4 FY08 FY09 FY10 FY11 FY12 FY13 4,940 7,490 7,037 6,709 8,232 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 5 100 50 0 (50) (100) 100% 80% 60% 40% 20% 0% 16 28% 1 APE growth yoy (%) (%) Private Players LIC (13) AUM by asset class (Rs Bn) Equity Income Liquid Gilt & Others Total AUM 3% 1% 2% 22% 13% 13% 51% 49% 47% 5 (17) (7) (7) (6) (5) (8) (26) (19) (17) (18) (22) (27) (28) 35% 36% 10% 9% 14% 13% 50% 56% 27% (53) 21% FY09 FY10 FY11 FY12 FY13 800 700 600 500 400 300 200 100 0
Thank you Published in May 2013 India Infoline Ltd 20012-13. India Infoline Ltd. All rights reserved. Regd. Off: IIFL House, Sun Infotech Park, Road No. 16V, Plot No.B-23, Thane Industrial Area, Wagle Estate, Thane 400604. Tel.: +(91 22)4007 7000 Fax: 2685 0451. This report is for information purposes only and does not construe to be any investment, legal or taxation advice. It is not intended as an offer or solicitation for the purchase and sale of any financial instrument. Any action taken by you on the basis of the information contained herein is your responsibility alone and India Infoline Ltd (hereinafter referred as IIL) and its subsidiaries or its employees or directors, associates will not be liable in any manner for the consequences of such action taken by you. We have exercised due diligence in checking the correctness and authenticity of the information contained herein, but do not represent that it is accurate or complete. IIL or any of its subsidiaries or associates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this publication. The recipients of this report should rely on their own investigations. IIL and/or its subsidiaries and/or directors, employees or associates may have interests or positions, financial or otherwise in the securities mentioned in this report.