Quarterly Results - Q1 FY9 (Apr- Jun 8) July 29, 28
Presentation structure Performance highlights- Q1 FY9 Business review Corporate overview Industry overview Unless otherwise mentioned, facts and figures in this presentation refer to those for the India Infoline group (consolidated) 2
Financial performance highlights Highlights Performance highlights Q1FY9 Group Quarterly Income at Rs 2.7bn, up 12% yoy Quarterly net profit before tax * at Rs 777mn, up 126% yoy Quarterly net profit after tax * at Rs 495mn, up 127% yoy EBIDTA margin for the quarter was 37.1% compared to 33.5% in Q1FY8 Equities broking Average daily equity trading turnover in Q1FY9 was Rs 23.7bn, up 7% yoy Market share on NSE up to 3.9% in Q1FY9 compared to 3% in Q1FY8 Won the Best Broker, India award ard by FinanceAsia magazine Insurance Insurance mobilization Rs 86mn up 44% yoy Received in-principle approval from IRDA for direct broker license Other businesses Commodities average daily volumes Rs 2.2bn, up 49% yoy Finance and credit income up 241% yoy First product launched by IIFL Wealth received an overwhelming response * before exceptional items
Performance highlights Q1FY9 Financial highlights YoY performance QoQ performance Rs Mn Q1FY9 Q1FY8 Y-Y (%) Q4FY8 Q-Q (%) FY8 Income from operations 2,684. 1,32.9 13% 3,833.1-3% 1,21.2 Equities brokerage & related 1,584.9 691.8 129% 1,913.9-17% 5,88.4 Financing and Investment 649.8 19.6 241% 1,113.7-42% 1,937.5 Marketing and online media 175.8 161.7 9% 313.6-44% 839.1 Life Insurance distribution 155.6 199.4-22% 23.6-33% 1,9.3 Commodities brokerage & related 49.9 39.3 27% 47.7 5% 166.4 Wealth and Mutual fund advisory 63.5 36.6 74% 79.5-2% 27.1 Merchant Banking 4.4 1.5 195% 134.1-97% 161.5 Others 6.5 13.2-51% 9. -28% 34.7 Total Income 2,69.5 1,334.1 12% 3,842.1-3% 1,235.9 A. Direct Cost (561.9) (28.6) 1% (785.4) -28% (2,169.8) B. Employee Cost (626.2) (346.1) 81% (86.) -22% (2,425.7) C. Administration Expenses (54.1) (26.6) 93% (573.8) -12% (1,618.2) EBITDA 998.3 446.8 123% 1,677. -4% 4,22.1 Interest (136.2) (44.) 29% (668.7) -8% (912.6) Depreciation & Amortisation (85.) (59.4) 43% (8.9) 5% (282.) Profit/ (Loss) before tax 777. 343.4 126% 927.3-16% 2,827.5 Provision for Tax/ FBT (243.1) (125.) 94% (236.9) 3% (898.) Minority interest (38.6) - - (31.6) 22% (4.4) Profit/ (Loss) before exceptional items 495.4 218.4 127% 658.9-25% 1,889.2 Exceptional items (net of tax) - (29.4) - (29.4) Profit/ (Loss) after exceptional items 495.4 (72.1) - 658.9-25% 1,598.8
Corporate overview Highlights of Q1FY9 India Infoline was named the Best Broker in India by the FinanceAsia magazine as a part of its annual survey of 28 of the financial i services firms in Asia India Infoline, the largest corporate agency for ICICI Prudential in India, received the in-principle approval from IRDA for its direct broker license. India Infoline can now offer customer a choice of insurance products across multiple life insurance companies Received in-principle approval for a direct broker license from IRDA India Infoline s broking, demat and software development services have received the coveted ISO 271:25 international certification during the year. The certification has been awarded by TUV, the reputed German certification authority. The first product launched by IIFL Wealth, Nifty-linked capital protected debentures, raised Rs 183Croes, which is the largest single-day listing of its kind 5
Presentation structure Performance highlights- Q1 FY9 Business review Corporate overview Industry overview Unless otherwise mentioned, facts and figures in this presentation refer to those for the India Infoline group (consolidated) 6
Business review Broking Retail customer base for equity broking Turbulent markets due to rising global and domestic uncertainties have impacted volumes Market share on NSE risen to 3.9% in Q1FY9 as against 3.5% in previous quarter and 3% in Q1FY8 Total volumes fallen by 7% as against 17% on the NSE Won the Best Broker award by FinanceAsia magazine Average daily turnover declined 11% qoq to Rs 23.7bn Continue to expand network and invest in technology, 6, 5, 4, 3, 2, 15, 438,864 495,636 systems and processes 75, 1, - FY6 FY7 FY8 Q1FY9 Equities broking (Cash & FAO) IIL market share 25 2 15 Equities Brokerage Rs Mn (LHS) Av. Daily Vol (Rs.Mn) 1128 2152 1922 1585 4 35 3 25 2 4.5% NSE Market Share 3.8% 3.2% 3.94% 1 5 641 693 568 66 499 15 1 5 2.6% 1.9% 1.92% Jun-6 Sep-6 Dec-6 Mar-7 Jun-7 Sep-7 Dec-7 Mar-8 Jun-8 1.3% Jun-6 Sep-6 Dec-6 Mar-7 Jun-7 Sep-7 Dec-7 Mar-8 Jun-8
Business review Insurance Received in principle direct broker license from IRDA Expect to activate broking license and deactivate agency arrangement by the end of August 28 The broking license will allow us to expand product range and increase cross sell of insurance products We have been the largest Corporate agent of ICICI Prudential (I Pru). We expect our healthy relationship with ipru to continue and grow. Multiple sales channels used branches/ corporate sales, tele-sales and seminar sales Investments in technology and call centers continues, in anticipation of strong growth in the business Life Insurance- Issuances for Trailing Four Quarters Life Insurance- multi-channel distribution 5 45 4 Figures in Rs Mn 3,597 3,725 3,91 4,151 4,468 4,744 Branch 35 3 25 2 Corporate Sales Customer Direct Marketing 15 1 5 Mar-7 Jun-7 Sep-7 Dec-7 Mar-8 Jun-8 Seminar Sales
Business review Credit and Finance Retail and property loan portfolio size of Rs6.2bn in Q1FY9 vis-à-vis Rs 3.3bn at previous quarter end 7% of portfolio in Mortgage loans; 3% in personal loans and business loans Present in 31 key locations across India, 15 new locations planned Product range includes Business loans, Promoter loans, Mortgages and Loans against shares Environment is challenging as inflation accelerates and economic growth decelerates Emphasis on foolproof systems for credit policy and underwriting Disbursal volume (Rs Mn) Number of disbursals 2, Business loans Personal loans Mortgage loans 1,4 Business loans Personal loans Mortgage loans 1,8 1,6 1,2 1,4 1, 1,2 8 1, 8 6 6 4 4 2 2 - - Q2FY8 Q3FY8 Q4FY8 Q1FY9 Q2FY8 Q3FY8 Q4FY8 Q1FY9
Wealth & mutual fund advisory Business review Fusion of ownership and management as IIFL Wealth is co-owned by key management team Reward structure of management team aligns IIFL Wealth with the client.we are on client s side Received an over whelming response to our first product- Nifty Enhancer Ability to customize products meeting specific mandates IIFL Wealth s unique Marquee Client proposition enables complete advisory across assets for client s portfolio Assets mobilized by India Infoline Group for mutual fund investment and wealth advisory crossed Rs2 crores as at Q1-FY9. Team size of 7 qualified and experienced wealth advisors. Asset return spectrum Products launched Nifty Enhancer Capital protection and leveraged return based on Nifty performance Twenty- Twenty Fifty- Nifty Capital protection and 2% guaranteed return on flat Nifty post one-year else 2% incremental returns on Nifty post two years Capital protection and 5% guaranteed return on flat Nifty post 3-years else reduction in returns by 1.75 times negative % Nifty
Business review Investment banking Business has been affected by adverse equity market conditions We are sanguine about medium term prospects, and there is a healthy pipeline BRLM for Nu Tek India Ltd Initial Public Offering Strong placement capabilities across institutional, high net worth and retail investors Separate and focused attention on SMEs Asset management Applied to SEBI for an in-principle i i approval to set up an Asset Management Company We have been one of the leading pan-india distributors for all asset management companies Current mutual fund penetration is low and has a huge potential to grow A recent McKinsey study on Indian Asset Management industry estimates retail segment of the industry to grow at a CAGR of 35 to 45%. The study also concludes that distribution (our key strength) will be the prime driver of growth
Presentation structure Performance highlights- Q1 FY9 Business review Corporate overview Industry overview Unless otherwise mentioned, facts and figures in this presentation refer to those for the India Infoline group (consolidated) 12
Our evolution Corporate overview IIFL Wealth launched 3 Revenues EBITDA Insurance broking approval Best Broker award 256 25 PBT PAT 2 CLSA team joins 15 Formed IIFL (Asia) Pte Ltd (USD Mn) 1 5 Launched online trading Became corporate agent for ipru Started distribution of financial products Launched proprietary platform for online Commodities broking Listing on NSE, BSE Launched proprietary trading platform Launched www.indiainfoline. trading Launched PMS com 19 2 3 4 3 9 3 2 2 8 6 5 DGCX membership 55 2218 12 16 35 29 19 2 21 22 23 24 25 26 27 28 11 71 48-5 13
Corporate overview Corporate structure India Infoline Ltd Equity broking, Investment Banking India Infoline Investment Services Ltd NBFC for financing India Infoline Commodities Ltd Commodities broking IIFL Wealth Management Ltd Wealth Management IIFL (Asia) Pte Ltd International operations India Infoline Media & Research Services Ltd Equity research, Portal & Online Media IIFL Realty Ltd Real Estate India Infoline Marketing Services Ltd Insurance distribution Moneyline Credit Ltd India Infoline India Infoline India Infoline India Infoline Insurance Services Ltd Housing Finance Ltd Distribution Co Ltd Insurance Brokers Ltd (Corporate agency) The above chart does not cover all group companies 14
Corporate overview Management team with a proven track record Attract and build a team with impeccable academic and professional credentials Open door, transparent and performance oriented culture Increasing level of employee ownership Invested in systems and processes with culture of audit Executive Directors Nirmal Jain R Venkataraman Board of Directors Non-executive Directors Sat Pal Khattar Independent Directors A. K. Purwar Nilesh Vikamsey Kranti Sinha Institutional Equities Investment Banking Consumer Finance Retail Broking Wealth Management International Operations H. Nemkumar A. Dange V. Jagannath Ajit Menon D. D Souza Apul Nayyar Mukesh Singh Karan Bhagat Yatin Shah Bharat Parajia Finance Compliance Operations Audit Kapil Krishan R. Mohan Narendra Jain S. Sandh Human Resources Capt.R.Sharma Technology Titus G. 15
Corporate overview Well entrenched across India Pan-India presence A multi-channel network spread over 35 cities and towns comprising 838 business locations Effectively covering all Metros, Class A and Class B towns and a few Class C towns Well-developed infrastructure of Zonal and Area offices for efficient administration and control Branches networked with best-in-class infrastructure VSAT, MPLS Regionally balanced and well-diversified geographical presence. India Infoline business locations 9 8 758 838 7 6 568 5 4 3 2 1 45 8 152 24 25 26 27 28 Q1FY9
Corporate overview India Infoline identities Retail broking Insurance Mutual Funds Institutional Equities Investment Banking Wealth Management Credit and Finance
Presentation structure Performance highlights- Q1 FY9 Business review Corporate overview Industry overview Unless otherwise mentioned, facts and figures in this presentation refer to those for the India Infoline group (consolidated) 18
Industry overview Industry overview Financial products penetration Markets performance 6 5 4 3 2 1 Penetration(%).6 Non-life premiums as % of GDP Source: IIFL research, RBI, IRDA 3.3 4.1 Credit cards as % of bankable population Life insurance premiums as % of GDP 11.5 12.6 Mutual fund AUM as % of GDP Consumer Loans as % of GDP 51.7 Loans as % of GDP 25, Sensex Nifty(RHS) 7 6 2, 5 15, 4 1, 3 2 5, 1 Mar-6 Jun-6 Sep-6 Dec-6Mar-7 Jun-7 Sep-7 Dec-7Mar-8 Jun-8 Source: BSE, NSE Average daily turnover on the rise Rising demat accounts 12 NSE Turnover (Rs Crs) 1 8 6 4 2 Apr-5 Jun-5 Aug-5 Oct-5 Dec-5 Feb-6 Apr-6 Jun-6 Aug-6 Oct-6 Dec-6 Feb-7 Apr-7 Jun-7 Aug-7 Oct-7 Dec-7 Feb-8 15 Demat accounts (mn) 14 13 12 11 1 9 8 7 6 5 Apr-4 Oct-4 Apr-5 Oct-5 Apr-6 Oct-6 Apr-7 Oct-7 Apr-8 Source: NSDL, CDSL
Industry overview Industry overview Initial public offerings Preferential equity 6 Amount mobilized (Rs mn) No. of issues(rhs) 14 25 Amount raised (Rs Mn) No. of issues (RHS) 14 5 4 3 2 1 12 1 8 6 4 2 2 15 1 5 12 1 8 6 4 2 2-1 21-2 22-3 23-4 24-5 25-6 26-7 27-8* 2-1 21-2 22-3 23-4 24-5 25-6 26-7 27-8 Source: Prime Database Source: Prime Database Insurance penetration(%) Consumer loans penetration 5. Life insurance Non-life insurance 4.5 4. 3.5 3. 2.5 2. 2.6 3. 38 3.8 4.5 5, 45, 4, 35, 3, 25, 2, Consumer loans (Rs bn) Penetration(%) GDP(Rs bn) 14 12 1 8 6 1.5 1..5..6.6.6.6 FY5 FY6 FY7 FY8(E) Source: IIFL research 15, 1, 5, FY5 FY6 FY7 FY8E Source: RBI, IMF, IIFL Research 4 2
Industry overview Industry overview HNWI wealth forecast (USD tn) Commodities- MCX gaining dominance 7 North America Europe Ai Asia-Pacific ifi Latin America Middle East Africa 6 1.7 3.4 5 1.3 4 1.7 1. 1.4.9 6.2 13.9 1.3.8 5.1 3 4.2 8.4 9.5 7.6 13.5 2 At 7.7% 9.4 1.1 1.6 Global growth 1 1.2 11.3 11.7 16.3 25 26 27 212(F) Source: Cap Gemini World Wealth Report, 28 Derivatives gaining currency 1,2, NCDEX MCX Turnover (Rs Crs) 1,, 8, 6, 4, 2, - Q1FY7 Q2FY7 Q3FY7 Q4FY7 Q1FY8 Q2FY8 Q3FY8 Q4FY8 Mutual funds AUM 2,, Cash Futures & Options 1,8, Turnover (Rs Crs) 1,6, 1,4, 1,2, 1,, 8, 6, 4, 2, Mar-5Jun-5Sep-5Dec-5Mar-6Jun-6Sep-6Dec-6Mar-7Jun-7Sep-7Dec-7 6, AUM (Rs bn) 5, 4, 3, 2, 1, - Mar-4 Mar-5 Mar-6 Mar-7 Mar-8 Jun-8 Source: AMFI
Thank you Published in July 28. India Infoline Ltd 28-9. India Infoline Ltd. All rights reserved. Regd. Off: 75, Nirlon Complex, Off W E Highway, Goregaon (E) Mumbai-4 63. Tel.: +(91 22)6677 59 Fax: 2685 451. 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. 22