31585254 IIFL Q3FY11 Analyst Presentation

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India Infoline Limited

Results for Quarter ended December 31, 2010

February 5, 2011



• Performance highlights

• Business review

•

• Industry update

2

Unless otherwise mentioned, facts and figures in this presentation refer to those for the India Infoline group (consolidated)




Performance highlights – Quarter ended Dec 31, 2010

For the quarter, Income stood at `4,596 mn, up 59% yoy and 35% qoq

EBIDTA margin was 47.8% as compared to 39.9% in the previous quarter

PAT stood at `671 mn up 13% yoy and 24% qoq

Equities Broking and related

Average daily turnover was around `62 bn, up 66 % yoy, up 34 % qoq

IIFL market share in NSE was 4.2% during the quarter

The Wealth Management business continues to grow. The assets under advisory are over `150 bn

During the quarter, our Investment Banking team handled Qualified Institutional Placements (QIPs) of

three mid‐sized companies

Financing and Investing

The aggregate loan book size increased to around `30 bn from `25.7 bn in the last quarter

NPAs on the book continue to remain less than 1%

Insurance, Marketing and Distribution

Insurance premium mobilization in the quarter was around `666 mn, up 7 % yoy

During the quarter, share of ULIP has increased from 8% to 26%

3Results for Quarter ended December 31, 2010



Financial highlights: Quarter ended Dec 31, 2010

` Mn Q3FY11 Q2FY11 Q‐Q Q3FY10 Y ‐Y

Equities, Broking and related income 1,870.1 1,634.0 14.5% 1,929.1 (3.1%)

Financing and Investing income 2,253.3 1,252.7 79.9% 598.4 276.6%

. . . . .

Other

income 1.8

5.4 (66.5%) 3.5 (47.9%)

Total Income 4,596.3 3,399.1 35.2% 2,897.3 58.6%

A. Direct cost 695.7 444.6 56.5% 423.8 64.2%

B. Employee cost 1,041.8 986.8 5.6% 828.2 25.8%

C. Administration expenses 659.8 610.1 8.1% 516.4 27.8%

EBITDA 2,199.0 1,357.6 62.0% 1,128.9 94.8%

Interest 1,042.3 385.3 170.5% 10.4 9969.4%

Depreciation and amortization 150.6 155.3 (3.0%) 150.0 0.4%

Profit / (Loss) before tax 1,006.1 817.0 23.1% 968.5 3.9%

Provision for taxation 322.7 267.5 20.6% 341.7 5.6%

Profit/(Loss) after tax before minority 683.4 549.5 24.4% 626.8 9.0%

Minority Interest 12.8 8.1 58.6% 31.7 (59.6%)

Profit/(Loss) after tax 670.6 541.4 23.9% 595.1 12.7%




Financial highlights: April to December, 2010

` Mn 9MFY11 9MFY10 Y ‐Y

Equities, Broking and related income 5,047.4 5,370.8 (6.0%)

Financing and Investing income 4,603.8 1,949.4 136.2%

, . . .

Other

income 9.0

6.6

35.9%Total Income 11,055.3 8,140.8 35.8%

A. Direct cost 1,617.7 1,170.8 38.2%

B. Employee cost 2,948.3 2,207.1 33.6%

C. Administration expenses 1,842.5 1,418.8 29.9%

EBITDA 4646.8 3344.1 39.0%

Interest 1,710.5 173.1 888.2%

Depreciation and amortization 460.0 415.6 10.7%

Profit / (Loss) before tax 2,476.3 2,755.4 (10.1%)

Provision for taxation 802.9 938.3 14.4%

Profit/(Loss) after tax before minority 1,673.4 1,817.1 (7.9%)

Minority interest 29.9 125.0 (76.0%)

Profit/(Loss) after tax 1,643.5 1,692.1 (2.9%)





• Business review

•

• Industry update

6





Equities

ar e s are on ncrease o . n

Average daily turnover up 66% yoy in Q3FY11 to around `62 bn

Present in over 2,700 business locations through branches and sub‐brokers

We launched of our latest version of the Trader Terminal which has a lightning fast execution speed,

world class user interface and a single‐click access to our world‐class research

Average Daily Turnover (` mn) Market share on NSE (in %)




Commodities

ommo es mar e s are ncrease o . n

Average daily turnover up 79% yoy in Q3FY11 to around `8 bn

The commodities market turnover has increased by 12% over the last quarter

Average Daily Turnover (` mn) Market share (in %)

6,547

7,801

7,000

8,000

9,000

2.0%

2.1%

2.0%

2.2%

4,367

4,660

5,206

4,000

5,000

6,000

1.6%1.7%

1.8%

1.6%

1.8%

1,000

2,000

3,000

1.2%

1.4%


‐

Dec 09 Mar 10 June 10 Sep 10 Dec 10

1.0%

Dec 09 Mar 10 June 10 Sep 10 Dec 10



Research

Over 150 stocks under coverage Our in‐depth, thematic research has been well received. Our recent research reports include:

INCH Chartbook: Sizing Up India and China

– ’

consumption

Singapore Commodities – A detailed report on three leading Singapore‐based commodity

traders

IIFL’s 2nd Global Investors’ Conference, ‘Enterprising India II’ is scheduled to be held in Mumbai

this month. We have received an overwhelming response from global investors, corporates and

eminent

leaders –

Black Diamond: Adetailed analysis of India’s coal industry

Discover Sri Lanka: Aprimer on this promising

market

Rigorous companyresearch that goes far

beyond the basics

INCH Chartbook:Sizing Up India and

China

High on Gas: How naturalgas will transform India’s

energy consumption

Three leadingSingapore-based

commodity traders




Insurance

Insurance premium mobilization in Q3FY11 was around 666 mn, up 7% yoy

During the quarter, share of ULIP has increased from 8% to 26% due to launch of new low

charge products by manufacturers

e c anges ma e y t e regu ator w ene t t e consumers an strengt en t e un amenta s

of the industry in the long term

Changing product mix Marketing and Distribution income (` mn)

Q2FY11 Q3FY11600

8%

18%1%

26% 366.4

479.0

417.0

.

471.1

400

500

73% 73%

1%

100

200

10

Guaranteed return ULIPs ULIP Pension Health


0

Dec

09 Mar

10 Jun

10 Sep

10 Dec

10

Endowment




e oans por o o as on ecem er , ncrease o aroun n

99% of the loan portfolio is secured against collateral of mortgages, shares, debentures and

other securities

Mortgages contri ute to 52% o t e en ing oo , o owe y margin un ing, oan against

securities and personal loans at 27%, 20% and 1% respectively

‐

Q2FY1129.730

35

Q3FY11

2%

43%

21%

12.0

16.3

19.5

.

15

20

25

52%

20%

34%

5

10 27%

11

Margin Funding LAS/DebentureDec 09 Mar 10 Jun 10 Sep 10 Dec 10





s on e oo s con nue o rema n ess an

Net interest margin and loan spreads, both are at healthy levels

During the quarter, we commenced Healthcare Financing. The products being offered include

‐ , ,

finance on existing equipment

Net Interest Margin and Loan Spread (%) Gross and Net NPA (%)

0.8%0.8%

0.9%

Gross NPA Net NPA

16%

NIM Spread

0.6%

0.7%

0.5%

0.5%

0.5%

0.7%

0.4%0.4%

0.5%

0.6%

0.7%.

12.8%

10.3%

7.2%8%

10%

12%

14%

0.1%

0.2%

0.3%

.

7.6%7.0%

4.9%

2%

4%

6%

12

0.0%

FY10 Q1FY11 Q2FY11 Q3FY11


0%

FY10 Q1FY11 Q2FY11 Q3FY11



Wealth management

Introduced Family Office – A multi‐manager investment platform offering a complete wealth

structuring solution including inter‐generational transfer, to clients

Have continuousl invested in u radation of s stems technolo and rocesses and built a

robust platform supporting multiple asset classes

Product Platform

Debt

Bonds & Other Debt

Equity

Direct Equity

Real Estate

RE Advisory

Cash

Cash & Cash

Equivalents

Debt Mutual Funds

Debt Structured

Products

Debt Managed A/c’s

Equity Mutual Funds

Equity Managed A/c’s

Equity Structure

Products

(Discretionary PMS)

(DPMS)(DPMS)

Private Equity

Transactions

Managed Accounts

(Discretionary PMS)Loan Assignments


Separate Demat



Investment banking

‐

sized companies

The company continues to invest in strengthening its investment banking team and infrastructure

Deal Snapshot: 9MFY11

GDRQIPQIP

Cox

&

Kings

India

Ltd.

,. ,

Vardhman

Textiles

Ltd.

. ,

Tilaknagar

Industries

Ltd.

RightsIPORs 774mn

IPORs 2,000mn

2010

BRLMSole BRLMBRLM

Videocon

Industries Limited

,

Talwalkars Better Value

Fitness Limited

Parabolic Drugs Limited

2010


Lead Manager

2010

Sole BRLM

2010Member of the

Syndicate



International Operations

commence ro ng opera ons n o om o an ngapore

The company donated its entire first week commissions from trading operations in SGX to

Community Chest, Singapore

IIFL receive FSA License in Lon on, UK or a vising on investments an arranging ea s in

investments for eligible counterparty and Professional Investors

Our international footprintIIFL Securities research products

INCH Chartbook: Three leading

New York

London

China

ngapore- asecommodity traders

Dubai

Singapore

Colombo





• Business review

•

• Industry update

16





Evolution

Income

` mn1995

Commenced

operations

as

an

Equity

Research

firm

1997 Launched research products of leading Indian

companies, key sectors and the economy

Client included leading FIIs, banks and companies

Launched www.indiainfoline.com

9,280 8,775

11,239 11,055

2000 Launched online trading through www.5paisa.com

Started distribution of life insurance and mutual fund

2003 Launched proprietary trading platform Trader Terminal

for retail customers

742

2,021

,

FY05 FY06 FY07 FY08 FY09 FY10 9MFY11

2004 Acquired commodities broking license

Launched Portfolio Management Service

2005

Maiden

IPO

and

listed

on

NSE,

BSE

1,599

1,448

2,320

1,643

2006 Acquired membership of DGCX

Commenced the lending business

2007 Commenced institutional equities business under IIFL

Formed Singapore subsidiary, IIFL (Asia) Pte LtdNetworth (` mn)

217492

756

FY05 FY06 FY07 FY08 FY09 FY10 9MFY11

14,892 15,447 16,053 17,9952008 Launc e IIFL Wea t

Transitioned to insurance broking model

2009 Acquired registration for Housing Finance

SEBI in‐principle approval for Mutual Fund

17

5221,943

3,251

FY05 FY06 FY07 FY08 FY09 FY10 H1FY11

2010 Received membership of the Singapore Stock Exchange

Received membership of the Colombo Stock Exchange


9MFY11



Business Model

• Wealth management

• Financial advisory

•

Our service offerings• Equities, commodities broking

• Mutual funds distribution

• Insurance distribution

Retail Affluent

qu es

Insurance

•Loans

CUSTOMER

SEGMENTS

Credit & finance

InstitutionalCorporate

Asset management

• Institutional equities

• Derivatives• Investment banking

• Corporate debt

Investment banking




Corporate Structure

India Infoline Ltd.(Bloomberg: IIFL IN)

India Infoline

Commodities

India Infoline

Investment

Services

India Infoline

Media &

Research

Services

IIFL RealtyIIFL (Asia) PteIIFL Wealth

Management

IIFL VenturesIIFL Capital

India Infoline

Marketing

& Services

Moneyline

CreditIndia

Infoline

Housing

Finance

India

Infoline

Distribution

Co.

India

Infoline

Insurance

Brokers

India

Infoline

Insurance

Services

19

* The above chart does not cover all group companies




Vision and Strategy

Vision

“To become the Most Respected Company in the financial services space”

Continuously assimilate, Drive stickiness through high

Business

Strategy Customer

Strategy Attract exceptionally

People

Strategy

knowledge to power

superior financial decisions

Focus on core competence in

Maintain cutting‐edge

proprietary technology

Wide multi‐modal network

Ensure conducive

environment

‐

financial services

Ensure de‐risked business

through multiple products

serving as one‐stop shop to

customers

an verse revenue streams




Management Team

eam w mpecca e aca em c an pro ess ona cre en a s

Open door, transparent and performance oriented culture

Increasing level of employee ownership

Management Team

Chairman and Managing Director Nirmal Jain Executive Director R. Venkataraman

Institutional Equities

Investment Banking

H. Nemkumar

Ajit Menon, Donald D’Souza

Finance

Compliance

O erations

LP Aggarwal

R Mohan

Retail Broking

Wealth Management

Nandip Vaidya

Karan Bhagat

Audit & Risk

Human Resources

Upendra Jaiswal

Capt Rahul Sharma

International

Operations Bharat

Parajia Technology Sankarson

Banerjee

Offshore Asset ManagementDeepesh Pandey, Manish

Srivastava

Insurance Distribution Mukesh Kumar Singh

21

Corporate FunctionsVerticals




Corporate governanceEminent independent directors of group companies

A.K. Purwar Independent Director• Joined State Bank in 1968 and became chairman in 2002

• Became Chairman of Indian Banks Association in the year 2005‐06

• Received CEO of the year’ and ‘Outstanding Achiever of the year’ award

Name Designation Brief Profile

Nilesh

Vikamsey Independent Director

• Chartered Accountant and partner of Khimji Kunverji & Co

• Part of the Managing Council and heading the Corporate Members

Committee of the Chamber of Tax Consultants (CTC)

• Director and Chief Executive of LIC Housing Finance Limited ‐1998 to 2002

M. N. Singh

n epen en rec or

Independent Director

• oncurren y was e o are omes

• Served as Deputy President of Governing Council of Insurance Institute

• Joined the ‘Indian Police Service’ in 1967

• Worked as the chiefs of the crime branch of Mumbai Police, State CID and

Anti‐Corruption Bureau

Category‐wise shareholding (%)

Board Committees Key Role

Board Committees

11.7%

MFs, UTI,Audit Committee Supervise financial reporting process and ensure

compliance with statutory requirements

Compensation

Committee

Review compensation of Executive & Non – Executive

Directors and senior employees

31.3%

27.0%

Promoter &

Promoter

Group

Public &

FI,

Banks

FIIs

22

are rans er

Investor Grievance

ev ew nves or gr evances an ensure re ressa o

the satisfaction of the shareholders


30.0%

Others



How we differentiate ourselves

• Promoted by first generation professional entrepreneurs

• Highly qualified and experienced Management teamManagerial depth

• Net worth approximately `18 bn

• Significant

unutilized

capacity

to

leverage

Well‐capitalized

,

• Global footprint covers Colombo, Dubai, New York and SingaporeDistribution reach

• The top management is driven by pride and reward of ownership‐

• To think and work like an owner is part of organization’s DNA

• Uniquely placed with proprietary front, mid and back office software

• Effectivel harnessed technolo to rovide su erior customer ex erienceTechnology edge

• De‐risked and diversified business model across multiple revenue streams

• Multiple products across all segments of financial servicesDe‐risked





• Business review

•

• Industry update

24





Equities

Source: Bloomberg, IIFL Research

Institutional Share of cash market volumes Increasing share of derivatives turnover in market

Source: Bloomberg, IIFL Research

25

Source: Bloomberg, IIFL Research. Based on provisional data from the exchanges Source: Bloomberg, IIFL Research




Insurance

APE market share (%) – Dec 2010APE yoy growth (%) – Dec 2010

Source: IRDA

APE growth YTD yoy (%) – Dec 2010 Annual life insurance premiums in USD bn (2008)

Source: IRDA

11

8

6

5

1

1

111

96

66

53

49

22

26

Source: IRDA

578

343

181

0 100 200 300 400 500 600 700Source: IIFL Research




Mutual funds

– –

Source: AMFI

AUM by asset class (` bn)

Source: AMFI

Domestic equity MFs have seen net outflows YTD (` bn)

27

Source: IIFL ResearchSource: AMFI




Capital raising and Fund flows

Capital raised through QIPs (` bn) Capital raised through IPOs (` bn)

FDI inflows (US$bn)Net FII flows (US$bn)

Source: Bloomberg, IIFL Research Source: Bloomberg, IIFL Research

28

Source: Bloomberg, IIFL Research Source: RBI, CMIE, IIFL Research




Thank you

Published in February 2011. © India Infoline Ltd 20010‐11.

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 forthe 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

29

. .

its subsidiaries and/or directors, employees or associates may have interests or positions, financial or otherwise in the securities mentioned in this report.

31585254 IIFL Q3FY11 Analyst Presentation

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