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Quarterly Results - Q1 FY09 (Apr- Jun’08)July 29, 2008
Presentation structure
• Performance highlights- Q1 FY09
• Business review
• Corporate overviewCorporate overview
• Industry overview
2Unless otherwise mentioned, facts and figures in this presentation refer to those for the India Infoline group (consolidated)
Performance highlights – Q1FY09
Financial performance highlights
Highlights
GroupGroupQuarterly Income at Rs 2.7bn, up 102% yoyQuarterly net profit before tax* at Rs 777mn, up 126% yoyQuarterly net profit after tax* at Rs 495mn, up 127% yoyEBIDTA margin for the quarter was 37.1% compared to 33.5% in Q1FY08
Equities brokingAverage daily equity trading turnover in Q1FY09 was Rs 23.7bn, up 70% yoyMarket share on NSE up to 3.9% in Q1FY09 compared to 3% in Q1FY08Won the ‘Best Broker India’ a ard b FinanceAsia maga ineWon the ‘Best Broker, India’ award by FinanceAsia magazine
InsuranceInsurance mobilization Rs 806mn up 44% yoyReceived in-principle approval from IRDA for direct broker license
Other businessesCommodities average daily volumes Rs 2.2bn, up 49% yoyFinance and credit income up 241% yoyFi t d t l h d b IIFL W lth i d h l i First product launched by IIFL Wealth received an overwhelming response
* before exceptional items
Performance highlights – Q1FY09
Financial highlights
Rs Mn Q1FY09 Q1FY08 Y-Y (%) Q4FY08 Q-Q (%) FY08
f 2 684 0 1 320 9 103% 3 833 1 30% 10 201 2
YoY performance QoQ performance
Income from operations 2,684.0 1,320.9 103% 3,833.1 -30% 10,201.2 Equities brokerage & related 1,584.9 691.8 129% 1,913.9 -17% 5,880.4 Financing and Investment 649.8 190.6 241% 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% 230.6 -33% 1,009.3 Commodities brokerage & related 49.9 39.3 27% 47.7 5% 166.4 gWealth and Mutual fund advisory 63.5 36.6 74% 79.5 -20% 207.1 Merchant Banking 4.4 1.5 195% 134.1 -97% 161.5 Others 6.5 13.2 -51% 9.0 -28% 34.7 Total Income 2,690.5 1,334.1 102% 3,842.1 -30% 10,235.9
A Direct Cost (561 9) (280 6) 100% (785 4) 28% (2 169 8) A. Direct Cost (561.9) (280.6) 100% (785.4) -28% (2,169.8) B. Employee Cost (626.2) (346.1) 81% (806.0) -22% (2,425.7) C. Administration Expenses (504.1) (260.6) 93% (573.8) -12% (1,618.2)
EBITDA 998.3 446.8 123% 1,677.0 -40% 4,022.1 Interest (136.2) (44.0) 209% (668.7) -80% (912.6) Depreciation & Amortisation (85.0) (59.4) 43% (80.9) 5% (282.0)
Profit/ (Loss) before tax 777.0 343.4 126% 927.3 -16% 2,827.5
Provision for Tax/ FBT (243.1) (125.0) 94% (236.9) 3% (898.0) Minority interest (38.6) - - (31.6) 22% (40.4) y ( ) ( ) ( )
Profit/ (Loss) before exceptional items 495.4 218.4 127% 658.9 -25% 1,889.2 Exceptional items (net of tax) - (290.4) - (290.4) Profit/ (Loss) after exceptional items 495.4 (72.1) - 658.9 -25% 1,598.8
Corporate overview
Highlights of Q1FY09
Received
in-principle approval
India Infoline was named the ‘Best Broker’ in India by the FinanceAsia magazine as a part of its annual survey of
2008 f th fi i l i
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
ff t h i f for a direct broker
license from IRDA
2008 of the financial services firms in Asia
offer customer a choice of insurance products across
multiple life insurance companies
India Infoline’s broking, dematand softwareand software
development services have received the coveted ISO
27001:2005 international certification during the
year. The certification has been awarded by TUV, the
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
y ,reputed German certification
authority.
single day listing of its kind
Presentation structure
• Performance highlights- Q1 FY09
• Business review
• Corporate overviewCorporate overview
• Industry overview
6Unless otherwise mentioned, facts and figures in this presentation refer to those for the India Infoline group (consolidated)
Business review
Broking
Turbulent markets due to rising global and domestic uncertainties have impacted volumesMarket share on NSE risen to 3 9% in Q1FY09 as against
Retail customer base for equity broking
495,636 500,000
600,000
Market share on NSE risen to 3.9% in Q1FY09 as against 3.5% in previous quarter and 3% in Q1FY08Total volumes fallen by 7% as against 17% on the NSEWon the ‘Best Broker’ award by FinanceAsia magazineAverage daily turnover declined 11% qoq to Rs 23.7bn
438,864
200 000
300,000
400,000
,
Continue to expand network and invest in technology, systems and processes 75,000
150,000
-
100,000
200,000
FY06 FY07 FY08 Q1FY09
Equities broking (Cash & FAO)
Equities Brokerage Rs Mn (LHS)
Av. Daily Vol (Rs.Mn)
IIL market share
3 94%
4.5% NSE Market Share2152
192235000
40000
2000
2500
3.94%
2.6%
3.2%
3.8%
568 606 641 693
1128
1922
1585
15000
20000
25000
30000
1000
1500
2000
1.92%
1.3%
1.9%
Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08
568 499606
0
5000
10000
0
500
Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08
Business review
Insurance
Received in principle direct broker license from IRDAExpect to activate broking license and deactivate agency arrangement by the end of August 2008Th b ki li ill ll d d d i ll f i dThe broking license will allow us to expand product range and increase cross sell of insurance productsWe 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 salesInvestments in technology and call centers continues, in anticipation of strong growth in the business
Life Insurance- Issuances for Trailing Four Quarters
Figures in Rs Mn
3 597 3,7253,901
4,1514,468
4,744
4000
4500
5000
Branch
Life Insurance- multi-channel distribution
3,597 3,725
1500
2000
2500
3000
3500
4000
Customer DirectMarketing
CorporateSales
0
500
1000
Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08
SeminarSales
Business review
Credit and Finance
Retail and property loan portfolio size of Rs6.2bn in Q1FY09 vis-à-vis Rs 3.3bn at previous quarter end70% of portfolio in Mortgage loans; 30% in personal loans and business loansPresent in 31 key locations across India, 15 new locations plannedProduct range includes Business loans, Promoter loans, Mortgages and Loans against sharesEnvironment is challenging as inflation accelerates and economic growth deceleratesEmphasis on foolproof systems for credit policy and underwriting
Number of disbursalsDisbursal volume (Rs Mn)
1 800
2,000 Business loans Personal loans Mortgage loans 1,400 Business loans Personal loans Mortgage loans
600
800
1,000
1,200
1,400
1,600
1,800
400
600
800
1,000
1,200
-
200
400
600
Q2FY08 Q3FY08 Q4FY08 Q1FY09
-
200
400
Q2FY08 Q3FY08 Q4FY08 Q1FY09
Business review
Wealth & mutual fund advisory
Fusion of ownership and management as IIFL Wealth is co-owned by key management teamReward structure of management team aligns IIFL Wealth with the client…‘.We are on client’s side’R i d h l i fi d Nif E hReceived an over whelming response to our first product- Nifty EnhancerAbility to customize products meeting specific mandatesIIFL Wealth’s unique ‘Marquee Client proposition’ enables complete advisory across assets for client’s portfolioAssets mobilized by India Infoline Group for mutual fund investment and wealth advisory crossed Rs2000 crores as at Q1-FY09.Team size of 70 qualified and experienced wealth advisors.
Asset return spectrum Products launched
Nifty EnhancerCapital protection and leveraged return based on Nifty performance
Twenty- TwentyCapital protection and 20% guaranteed return on flat Nifty post one-year else 20% incremental returns on Nifty post two years
Capital protection and 50% guaranteed return on flat Nifty post 3 years else Fifty- Nifty 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 conditionsWe are sanguine about medium term prospects, and there is a healthy pipelineBRLM f N T k I di L d I i i l P bli Off iBRLM for Nu Tek India Ltd Initial Public OfferingStrong placement capabilities across institutional, high net worth and retail investorsSeparate and focused attention on SMEs
Asset management
A li d t SEBI f i i i l l t t A t M g t CApplied to SEBI for an in-principle approval to set up an Asset Management CompanyWe have been one of the leading pan-India distributors for all asset management companiesCurrent mutual fund penetration is low and has a huge potential to growA 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 FY09
• Business review
• Corporate overviewCorporate overview
• Industry overview
12Unless otherwise mentioned, facts and figures in this presentation refer to those for the India Infoline group (consolidated)
Corporate overview
300
IIFL Wealth launched
Insurance broking approval
Our evolution
256
250
Revenues EBITDA
PBT PAT
‘Best Broker’ award
150
200
CLSA team joins
Formed IIFL (Asia) Pte Ltd
106101
71
100
150
Listing on NSE, BSE
Launched proprietary
DGCX membership
Pte Ltd
(US
D M
n)
Launched online trading
Became corporate agent for iPru
2 3 4 39
19
55
3 822
35
2 618
29
71
2 512
19
4850 Launched
www.indiainfoline.com
Commodities broking
Launched PMS
proprietary trading platform
agent for iPru
Started distribution of financial products
Launched proprietary platform for online trading
2 2 2
-50
0
2000 2001 2002 2003 2004 2005 2006 2007 2008
13
Corporate overview
Corporate structure
India Infoline LtdEquity broking Investment BankingEquity broking, Investment Banking
India InfolineInvestment Services
LtdNBFC for financing
India Infoline Commodities LtdCommodities broking
IIFL (Asia)Pte Ltd
International operations
India InfolineMedia & Research
Services LtdEquity research, Portal
& Online Media
India Infoline Marketing
Services LtdInsurance distribution
IIFL Wealth Management LtdWealth Management
IIFL Realty LtdReal Estate
India Infoline Housing Finance LtdMoneyline Credit Ltd India Infoline
Distribution Co LtdIndia Infoline
Insurance Brokers Ltd
India Infoline Insurance Services LtdHousing Finance Ltd Distribution Co Ltd Insurance Brokers Ltd
(Corporate agency)
14
The above chart does not cover all group companies
Corporate overview
Attract and build a team with impeccable academic and professional credentialsOpen door, transparent and performance oriented culture
Management team with a proven track record
Increasing level of employee ownershipInvested in systems and processes with culture of audit
Board of Directors
Executive Directors
Ni l J i
Non-executive Directors
S t P l Kh tt
Independent Directors
A K P
Institutional Equities
Investment Banking
Consumer Finance
Retail Broking
Wealth Management
International Operations
•Nirmal Jain•R Venkataraman
•Sat Pal Khattar •A. K. Purwar•Nilesh Vikamsey•Kranti Sinha
Finance Compliance Operations Audit Human Resources Technology
• H. Nemkumar• A. Dange• V. Jagannath
• Ajit Menon• D. D’Souza
• Apul Nayyar • Mukesh Singh • Karan Bhagat• Yatin Shah
•Bharat Parajia
15
• Kapil Krishan
p
• R. Mohan
p
• Narendra Jain • S. Sandh
Resources
• Capt.R.Sharma
Technology
• Titus G.
Corporate overview
Pan-India presence
A multi-channel network spread over 350 cities and towns comprising 838 business locationsEffectively covering all Metros Class A and Class B
Well entrenched across India
Effectively covering all Metros, Class A and Class B towns and a few Class C townsWell-developed infrastructure of Zonal and Area offices for efficient administration and controlBranches networked with ‘best-in-class’ infrastructure –VSAT MPLSVSAT, MPLSRegionally balanced and well-diversified geographical presence.
India Infoline business locations
758
838
800
900
568
300
400
500
600
700
4580
152
0
100
200
2004 2005 2006 2007 2008 Q1FY09
Corporate overview
India Infoline identities
Retail broking Insurance Mutual FundsRetail broking Insurance Mutual Funds
Institutional Equities Investment Banking Wealth Management
Credit and Finance
Presentation structure
• Performance highlights- Q1 FY09
• Business review
• Corporate overviewCorporate overview
• Industry overview
18Unless otherwise mentioned, facts and figures in this presentation refer to those for the India Infoline group (consolidated)
Industry overviewIndustry overview
Industry overview
51.760 Penetration(%)
Financial products penetration Markets performance
25,000 7000Sensex Nifty(RHS)
0.6 3.3 4.111.5 12.6
10
20
30
40
50
10,000
15,000
20,000
3000
4000
5000
6000
Sensex Nifty(RHS)
0Non-life
premiumsas % of
GDP
Credit cards as % of
bankablepopulation
Life insurancepremiums
as % ofGDP
Mutual fundAUM as %
of GDP
Consumer Loans as% of GDP
Loans as % of GDP
Source: IIFL research, RBI, IRDA
0
5,000
Mar-06 Jun-06 Sep-06 Dec-06Mar-07 Jun-07 Sep-07 Dec-07Mar-08 Jun-08
0
1000
2000
Source: BSE, NSE
Rising demat accounts
14
15 Demat accounts (mn)
Average daily turnover on the rise
100000
120000 NSE Turnover (Rs Crs)
8
9
10
11
12
13
40000
60000
80000
100000
56
7
8
Apr-04 Oct-04 Apr-05 Oct-05 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08
Source: NSDL, CDSL
0
20000
Apr-0
5
Jun-
05
Aug-
05
Oct
-05
Dec
-05
Feb-
06
Apr-0
6
Jun-
06
Aug-
06
Oct
-06
Dec
-06
Feb-
07
Apr-0
7
Jun-
07
Aug-
07
Oct
-07
Dec
-07
Feb-
08
Industry overviewIndustry overview
Industry overview
Initial public offerings Preferential equity
600 140Amount mobilized (Rs mn) No. of issues(RHS) Amount raised (Rs Mn) No. of issues (RHS)250 14000
300
400
500
60
80
100
120
100
150
200
6000
8000
10000
12000
Source: Prime Database
0
100
200
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08*0
20
40
Source: Prime Database
0
50
2000-01 2002-03 2004-05 2006-07
0
2000
4000
2001-02 2003-04 2005-06 2007-08
Consumer loans penetration
45,000
50,000
12
14Consumer loans (Rs bn) GDP(Rs bn)
Penetration(%)
Insurance penetration(%)
3 8
4.5
4.5
5.0 Life insurance Non-life insurance
15,000
20,000
25,000
30,000
35,000
40,000
4
6
8
10
2.63.0
3.8
1.5
2.0
2.5
3.0
3.5
4.0
Source: RBI, IMF, IIFL Research
0
5,000
10,000
FY05 FY06 FY07 FY08E0
20.6 0.6 0.6 0.6
0.0
0.5
1.0
FY05 FY06 FY07 FY08(E)Source: IIFL research
Industry overviewIndustry overview
HNWI wealth forecast (USD tn) Commodities- MCX gaining dominance
Industry overview
1 200 000 NCDEX MCX70 N th A i E A i P ifi
600,000
800,000
1,000,000
1,200,000 NCDEX MCXTurnover (Rs Crs)
13.95.1
6.2
10.3
1.31.4
1.7
3.4
0.80.9
1.0
1.7
30
40
50
60
70 North America Europe Asia-PacificLatin America Middle East Africa
-
200,000
400,000
Q1FY07 Q2FY07 Q3FY07 Q4FY07 Q1FY08 Q2FY08 Q3FY08 Q4FY08
10.2 11.3 11.716.3
9.4 10.1 10.6
13.57.68.4 9.54.2
3
0
10
20
30
2005 2006 2007 2012(F)
At 7.7% Global growth
Derivatives gaining currency
1 800 000
2,000,000 Cash Futures & Options
Turnover (Rs Crs)
Source: Cap Gemini World Wealth Report, 2008
Mutual funds AUM
6,000 AUM (Rs bn)
600 000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000 Turnover (Rs Crs)
2,000
3,000
4,000
5,000
0
200,000
400,000
600,000
Mar-05Jun-05Sep-05Dec-05Mar-06Jun-06Sep-06Dec-06Mar-07Jun-07Sep-07Dec-07
Source: AMFI
-
1,000
Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Jun-08
Thank you
Published in July 2008. © India Infoline Ltd 2008-09.
India Infoline Ltd. All rights reserved. Regd. Off: 75, Nirlon Complex, Off W E Highway, Goregaon (E) Mumbai-400 063.Tel.: +(91 22)6677 5900 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 orsolicitation for the purchase and sale of any financial instrument. Any action taken by you on the basis of the information contained herein is yourresponsibility alone and India Infoline Ltd (hereinafter referred as IIL) and its subsidiaries or its employees or directors, associates will not be liable inany manner for the consequences of such action taken by you. We have exercised due diligence in checking the correctness and authenticity of theinformation contained herein, but do not represent that it is accurate or complete. IIL or any of its subsidiaries or associates or employees shall not bein 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
22
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 haveinterests or positions, financial or otherwise in the securities mentioned in this report.