th iifl holdings limited… · 2018-12-28 · daily market turnover (including f&o) for the...

Document code: FOTL_271220184_2 Copyright © 2016 Firstobject Technologies Ltd. All rights reserved

IIFL HOLDINGS LIMITEDResult Update (CONSOLIDATED BASIS): Q2 FY19

CMP: 495.00 DEC 27th, 2018

Overweight ISIN:INE530B01024

Index Details SYNOPSISIIFL Holdings Ltd is engaged in the business ofloans and mortgages, asset and wealth management,retail and institutional broking, investment bankingand realty services through its various subsidiaries.During Q2 FY19, consolidated net profit jumps toRs. 3039.47 mn from Rs. 2341.54 mn in Q2 FY18,an increase of 29.81%.Consolidated revenue for the quarter increased by13.97% at Rs. 18322.48 mn as compared to Rs.16076.36 mn in Q2 FY18.During Q2 FY19, consolidated EBIDTA is Rs.12908.23 mn as against Rs. 10209.99 mn in Q2FY18, grew by 26.43%.During Q2 FY19, consolidated PBT increased by41.02% to Rs. 4566.65 mn from Rs. 3238.32 mn inQ2 FY18.EPS of the company stood at Rs. 9.53 a share duringthe quarter, as against Rs. 7.35 per share overprevious year period.Revenue of the company registered a growth of18.97% at Rs. 36002.25 mn in H1 FY19 as againstRs. 30261.33 mn in H1 FY18.During H1 FY19, PAT of the company rose by33.20% at Rs. 3484.93 mn as compared to Rs.4868.68 mn in H1 FY18.During the quarter company has commissioned 208new branches, including 135 for the microfinancebusiness.Loan assets under management, predominantly retail,showed a strong growth of 40% y-o-y to Rs. 363730mn, mainly driven by small-ticket home loans, SMEloans and microfinance loans.IIFL Holdings, subsidiary IIFL Securities Ltd is inthe process of acquiring 15% strategic stake inBangalore based fin-tech startup Trendlyne(“Giskard Datatech Private Ltd”).Net Sales and PAT of the company are expected togrow at a CAGR of 36% and 44% over 2017 to2020E, respectively.

Stock DataSector Other Financial ServicesBSE Code 532636Face Value 2.0052wk. High / Low (Rs.) 872.70/341.00Volume (2wk. Avg.) 9766Market Cap (Rs. in mn.) 157937.18

Annual Estimated Results(A*: Actual / E*: Estimated)Years (Rs. in mn) FY18A FY19E FY20ENet Sales 38126.19 64814.52 78425.57EBITDA 28230.05 47451.53 57394.45Net Profit 9113.24 10997.27 13395.42EPS 28.57 34.47 41.98P/E 17.33 14.36 11.79

Shareholding Pattern (%)

As on Sep 2018 As on June 2018

Promoter 28.95 28.95

Public 71.03 71.03

Others 0.02 0.02

1 Year Comparative Graph

IIFL HOLDINGS LTD S&P BSE SENSEX

PEER GROUPS CMP MARKET CAP EPS(TTM) P/E (X)(TTM) P/BV(X) DIVIDEND

Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)

IIFL Holdings Ltd 495.00 157937.18 37.50 13.19 3.12 250.00Weizmann Forex Ltd 481.90 5362.50 31.66 15.22 2.88 10.00Edelweiss Financial Services Ltd. 185.75 173117.00 10.96 16.95 2.23 135.00Motilal Oswal Financial Serv. Ltd. 647.00 94195.80 27.74 23.32 4.09 850.00


QUARTERLY HIGHLIGHTS (CONSOLIDATED BASIS)

Results updates- Q2 FY19,

(Rs. in millions) Sep-18 Sep-17 % Change

Revenue 18322.48 16076.36 13.97%

Net Profit 3039.47 2341.54 29.81%

EPS 9.53 7.35 29.57%

EBIDTA 12908.23 10209.99 26.43%

IIFL Holdings Ltd consolidated net profit increased by 29.81% at Rs. 3039.47 million from Rs. 2341.54 million in the

corresponding quarter ending of previous year. Revenue for the quarter stood at Rs. 18322.48 million as against Rs.

16076.36 million, increased by 13.97% when compared with the prior year period. Reported earnings per share of the

company stood at Rs. 9.53 a share during the quarter, as against Rs. 7.35 per share over previous year period. Profit before

interest, depreciation and tax is Rs. 12908.23 million as against Rs. 10209.99 million in the corresponding period of the

previous year.

Break up of Expenditure

Break up ofExpenditure

Value in Rs. Million

Q2 FY19 Q2 FY18 %Change

Fees and CommissionExpenses 259.26 466.81 -44%

Impairment onFinancial Instruments 649.31 1572.42 -59%

Employee BenefitExpenses 3235.74 2526.51 28%

Depreciation,Amortization andImpairment

216.97 163.44 33%

Other Expenses 1632.59 1531.33 7%


Segment Revenue

IIFL HOLDINGS RESULT HIGHLIGHTS:

Revenue of the company registered a growth of 18.97% at Rs. 36002.25 mn in H1 FY19 as against Rs. 30261.33 mn

in H1 FY18.

During H1 FY19, PAT of the company rose by 33.20% at Rs. 3484.93 mn as compared to Rs. 4868.68 mn in H1

FY18.

Commercial Papers repaid and prepaid during October 2018 across the group were Rs. 42750 mn.

During the quarter company has commissioned 208 new branches, including 135 for the microfinance business. With

this, IIFL’s own branch network (not including sub-brokers) stands at 1,823, with over 19,000 employees

Loans and Mortgages:

The Loans and Mortgages business is carried out by India Infoline Finance Limited and its two subsidiaries, IIFL

Home Finance Limited and Samasta Microfinance Limited through 1,755 branches spanning across the length and

breadth of the country.

The profit after tax for Q2 FY19 was Rs. 1610 mn, up 70% y-o-y, while total income was Rs. 5770 mn, up 24% y-o-

y.

NBFC’s ROE for Q2 FY19 stood at 16.7% and ROA was 1.9%. Average borrowing costs increased by 20 bps y-o-y

to 8.7%. Net Interest Margin was at 6.8%.

Loan assets under management (AUM), predominantly retail, showed a strong growth of 40% y-o-y to Rs. 363730

mn, mainly driven by small-ticket home loans, SME loans and microfinance loans.

At the end of the quarter, retail home loan assets grew to Rs. 106030 mn, up 59% y-o-y.


The microfinance business continued its steady growth, with a loan AUM stood at Rs. 14480 mn at the end of the

quarter, showing a growth of 30% q-o-q.

The MFI customer base increased to over 6,00,000 customers and branch network grew to 394 branches. Commercial

vehicle loans and Gold loans recorded strong growth as well.

85% of loans are retail in nature and 46% are PSL compliant. The securitized loan book, currently at Rs. 54950 mn, is

15% of AUM. There exists significant opportunity for securitization, which will positively impact profitability and

CAR.

Asset quality remains sound with GNPA of 2.2% and NNPA of 1.0% as on September 30, 2018. With implementation

of Expected Credit Loss under IndAS, specific provision coverage on NPAs stands at 53%.

IIFL Finance has long-term credit rating by CRISIL AA/Stable, ICRA-AA (Stable), CARE AA (Positive).

Capital adequacy:

Total CAR stood at 18.7% including Tier I capital of 15.5% as at September 30, 2018, as against statutory

requirement of 15% and 10% respectively.

IIFL Home Finance raised funding from NHB and SBI

IIFL Home Finance availed a refinancing facility from the NHB for Rs. 10000 mn. Also, State Bank of India extended

Rs. 12000 mn through term loans and Rs. 3680 mn through the automated route external commercial borrowing.

The NHB credit has to be repaid in the next seven to fifteen years, while the SBI loans have to be repaid in five years.

The money will be deployed majorly into the affordable housing schemes, as the segment has a huge potential for

growth.

Wealth and Asset Management:

The company’s total assets under management, distribution and advice witnessed 23% y-o-y growth to reach Rs.

1448640 mn in Q2 FY19. The PBT has shown a healthy growth for Q2 FY19 to Rs. 1550 mn, up 23% y-o-y, whereas

PAT for Q2 FY19 was at Rs. 1000 mn versus Rs. 1010 mn in Q2 FY18, mainly on account of increased tax cost.

Acquisition of Wealth Advisors India and Altiore Advisors

IIFL Wealth has initiated the acquisition of Wealth Advisors (India) Pvt. Ltd., a Chennai based wealth management

firm, for a total consideration of Rs. 2350 mn. Post acquisition, Wealth Advisors will become a wholly owned

subsidiary of the company.

IIFL Wealth has also proposed to acquire Altiore Advisors Private Limited, a Bengaluru-based fintech company. Both

the acquisitions are progressing as per schedule.


Capital Market and others:

IIFL is a key player in both retail and institutional segments of the capital market and category I merchant banker.

IIFL have close to 1,400 service locations comprising a wide branch and sub-broker network and providing

unparalleled research coverage on over 500 companies.

IIFL Capital Markets net profits for the quarter grew by 23% y-o-y to Rs. 460 mn. During the quarter, the average

daily market turnover (including F&O) for the broking business was Rs. 210700 n, up 66% y-o-y with the average

daily cash market turnover at Rs. 13340 mn, up 19% y-o-y.

IIFL mobile trading app, ‘IIFL Markets’ continues to be the highest rated amongst peers (4.3) with over 21 lakh

downloads. Mobile brokerage constituted about 44% of the total.

IIFL’s Mutual Fund App crossed 4.3 lakh downloads with a 4.3 star rating, and is steadily building on its customer

base.

Investment Banking:

During the quarter, IIFL Investment Banking continued to record a strong performance and has completed 4 transactions

across various products.

OTHER UPDATES:

During the quarter, the Company’s subsidiary India Infoline Finance Ltd (IIFL Finance) raised Rs. 3250 mn from

CDC Group Plc (CDC), the United Kingdom’s Government-owned Development Finance Institution.

IIFL Wealth Management Limited approved the issue of 5.1% equity to marquee financial investors named Amansa,

General Atlantic, HDFC Standard Life Insurance, Rimco, Steadview and Ward Ferry for a consideration of Rs. 7460

mn.

COMPANY PROFILEIIFL Holdings Ltd is a leading player in the Indian financial services space. IIFL is engaged in the business of loans and

mortgages, asset and wealth management, retail and institutional broking, investment banking and realty services through

its various subsidiaries.

IIFL Holdings Ltd is headquartered in Mumbai with overseas offices in London, New York, Toronto, Geneva, Hong

Kong, Dubai, Singapore and Mauritius. Started as a research firm in 1995, IIFL is a first generation venture. Today, IIFL

is a diversified financial services group with a consolidated net-worth of Rs. 56390 mn as on Sep 30, 2018, offering a

gamut of services to more than 50 lakh customers across various business segments and is continuously building on its

strengths to deliver excellent service to its expanding customer base.

IIFL is featured in the prestigious Forbes list of 'India's Super 50 Companies' in 2017, a benchmark to identify Indian

companies that exhibit high growth in profitability, sales and shareholder returns. IIFL is also among the 'Outlook

Business Outperformers' - a prestigious list of eight companies which have beaten the Sensex over a five-year period. IIFL

is ranked as the #1 Investment Banker in Equity Issuances for CY2016 and CY2017 YTD (January 2016-December 2017)


by PRIME Database. IIFL won ‘The Best Private Banking Services Overall, India’ award at Euro money Private Banking

and Wealth Management Survey, 2017. IIFL was recognized as ‘India's Most Trusted Financial Service Brand (Non-

Bank)’ by the Brand Trust Report India Study, 2016. IIFL Group bagged ‘Best Customer Service in the Financial Sector’

by World Quality Congress - service quality awards in 2015. IIFL received ‘India’s Most Promising Brand’ 2014 award at

WCRC Global India Excellence Summit in London, in 2014.


FINANCIAL HIGHLIGHT (CONSOLIDATED BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)

Balance Sheet as of March 31, 2017 -2020E

FY17A FY18A FY19E FY20ESOURCES OF FUNDSShareholder's Funds

Share Capital 635.82 637.96 638.13 638.13Reserves and Surplus 43178.37 50018.77 61016.04 74411.46Money Received Against Share Warrants 0.09 0.00 0.00 0.00

1. Sub Total - Net worth 43814.28 50656.73 61654.17 75049.592. Share Application Money Pending Allotment 1.46 4.16 0.00 0.003. Minority Interest 12552.23 15002.89 19503.76 23014.43Non Current Liabilities

Long term Borrowings 128010.93 127109.87 123296.57 119597.67Deferred Tax Liabilities [Net] 0.00 0.51 0.00 0.00Current Tax Liability 0.00 0.00 1147.38 1216.22Other Long Term Liabilities 2465.05 2329.78 2259.88 2214.69Long Term Provisions 1218.92 1761.43 1497.22 1347.50

4. Sub Total - Non Current Liabilities 131694.90 131201.58 128201.05 124376.08Current Liabilities

Short term Borrowings 92121.28 153446.07 191807.59 230169.11Trade Payables 1452.89 1448.08 1520.49 1581.31Other Current Liabilities 54015.82 83323.73 106654.38 130118.34Short Term Provisions 1954.04 1949.91 2047.41 2129.31

5. Sub Total - Current Liabilities 149544.02 240167.80 302029.86 363998.06Total Liabilities (1+2+3+4+5) 337606.88 437033.16 511388.84 586438.15APPLICATION OF FUNDSNon-Current AssetsFixed Assets

Tangible Assets 5349.50 6025.60 6628.16 7158.41Intangible Assets 66.94 122.37 156.64 187.96Capital Work in Progress 709.93 1102.71 1411.47 1693.77Intangible Assets Under Development 3.25 0.00 0.00 0.00a) Sub - Total Fixed Assets 6129.63 7250.68 8196.27 9040.14b) Goodwill on Consolidation 636.49 648.61 681.04 715.09c) Non Current Investments 13280.26 17640.85 22580.29 27096.35d) Deferred Tax Assets 1579.31 1775.85 1953.44 2109.71e) Long Term loans and advances 140263.27 192533.42 228194.49 261729.30f) Other Non – Current Assets 591.68 1779.16 2223.95 2668.73

1. Sub Total - Non Current Assets 162480.64 221628.56 263829.46 303359.32Current Assets

Current Investments 28750.22 16564.43 12423.32 10187.12Inventories 312.49 205.56 168.56 151.70Trade Receivables 5301.99 2599.18 1949.39 1656.98Cash and Bank Balances 37913.14 29531.17 26578.05 24983.37Short-terms loans & advances 87068.95 146102.49 180937.85 215497.01Other Current Assets 15779.45 20401.76 25502.20 30602.64

2. Sub Total - Current Assets 175126.24 215404.60 247559.37 283078.83Total Assets (1+2) 337606.88 437033.16 511388.84 586438.15


Annual Profit & Loss Statement for the period of 2017 to 2020E

Value(Rs.in.mn) FY17A FY18A FY19E FY20E

Description 12m 12m 12m 12mNet Sales 31378.50 38126.19 64814.52 78425.57Other Income 261.48 415.43 1433.22 1633.87Total Income 31639.99 38541.62 66247.74 80059.44Expenditure -6950.72 -10311.56 -18796.21 -22664.99Operating Profit 24689.26 28230.05 47451.53 57394.45Interest -17793.52 -18967.68 -30348.28 -36721.42Gross profit 6895.74 9262.38 17103.25 20673.03Depreciation -158.72 -173.05 -745.50 -857.33Profit Before Tax 6737.03 9089.32 16357.75 19815.70Tax -2259.51 -2849.47 -5316.27 -6420.29Profit After Tax 4477.52 6239.85 11041.48 13395.42Minority Interest -1361.87 -2507.53 0.00 0.00Share of Profit & Loss Assoc. 0.96 0.00 -44.21 0.00Profit/Loss from Discontinued Operations 3744.28 5380.92 0.00 0.00Net Profit 6860.89 9113.24 10997.27 13395.42Equity capital 635.82 637.96 638.13 638.13Reserves 43178.37 50018.77 61016.04 74411.46Face value 2.00 2.00 2.00 2.00EPS 21.58 28.57 34.47 41.98

Quarterly Profit & Loss Statement for the period of 31st Mar, 2018 to 31st Dec, 2018E

Value(Rs.in.mn) 31-Mar-18 30-June-18 30-Sep-18 31-Dec-18EDescription 3m 3m 3m 3mNet sales 10182.78 17679.77 18322.48 17406.36Other income 175.46 383.97 362.64 406.15Total Income 10358.24 18063.73 18685.12 17812.51Expenditure -2773.30 -5155.51 -5776.89 -5244.54Operating profit 7584.94 12908.23 12908.23 12567.97Interest -5021.98 -7572.62 -8124.61 -8612.09Gross profit 2562.96 5335.61 4783.62 3955.88Depreciation -52.78 -194.59 -216.97 -232.15Profit Before Tax 2510.18 5141.02 4566.65 3723.73Tax -793.94 -1681.37 -1514.19 -1210.21Profit After Tax 1716.25 3459.65 3052.46 2513.52Minority Interest -696.36 0.00 0.00 0.00Share of Profit & Loss Assoc. 0.00 -14.18 -12.99 -14.03Profit/Loss from Discontinued Operations 1463.63 0.00 0.00 0.00Net Profit 2483.51 3445.46 3039.47 2499.49Equity capital 637.96 638.07 638.13 638.13Face value 2.00 2.00 2.00 2.00EPS 7.79 10.80 9.53 7.83


Ratio Analysis

Particulars FY17A FY18A FY19E FY20E

EPS (Rs.) 21.58 28.57 34.47 41.98EBITDA Margin (%) 78.68% 74.04% 73.21% 73.18%PBT Margin (%) 21.47% 23.84% 25.24% 25.27%PAT Margin (%) 14.27% 16.37% 17.04% 17.08%P/E Ratio (x) 22.94 17.33 14.36 11.79ROE (%) 10.22% 12.32% 17.91% 17.85%ROCE (%) 9.29% 8.47% 12.40% 13.31%Debt Equity Ratio 5.02 5.54 5.11 4.66EV/EBITDA (x) 12.59 13.90 9.15 8.23Book Value (Rs.) 137.82 158.81 193.23 235.22P/BV 3.59 3.12 2.56 2.10

Charts


OUTLOOK AND CONCLUSION

At the current market price of Rs. 495.00, the stock P/E ratio is at 14.36 x FY19E and 11.79 x FY20E respectively.

Earnings per share (EPS) of the company for the earnings for FY19E and FY20E are seen at Rs. 34.47 and Rs. 41.98

respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 36% and 44% over 2017 to 2020E,

respectively.

On the basis of EV/EBITDA, the stock trades at 9.15 x for FY19E and 8.23 x for FY20E.

Price to Book Value of the stock is expected to be at 2.56 x and 2.10 x for FY19E and FY20E respectively.

Hence, we say that, we are Overweight in this particular scrip for Medium to Long term investment.


Disclosure Section

The information and opinions in Firstcall Research was prepared by our analysts and it does not constitute an offer orsolicitation for the purchase or sale of any financial instrument including any companies scrips or this is not an officialconfirmation of any transaction. The information contained herein is from publicly available secondary sources and dataor other secondary sources believed to be reliable but we do not represent that it is accurate or complete and it should notbe relied on as such. Firstcall Research or any of its affiliates shall not be in any way responsible for any loss or damagethat may arise to any person from any inadvertent error in the information contained in this report. Firstcall Research and/or its affiliates and/or employees will not be liable for the recipients’ investment decision based on this document.

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The following analysts hereby state that their views about the companies and sectors are on best effort basis to the best oftheir knowledge. Unless otherwise stated, the individuals listed on the cover page of this report are research analysts. Theanalyst qualifications, sectors covered and their exposure if any are tabulated hereunder:

Name of the Analyst Qualifications SectorsCovered

Exposure/Interest tocompany/sector UnderCoverage in the CurrentReport

Dr.C.V.S.L. Kameswari M.Sc, PGDCA,M.B.A,Ph.D (Finance)

Pharma &Diversified

No Interest/ Exposure

U. Janaki Rao M.B.A CapitalGoods


B. Anil Kumar M.B.A Auto, IT &FMCG


V. Harini Priya M.B.A Diversified No Interest/ Exposure

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th iifl holdings limited… · 2018-12-28 · daily market turnover (including f&o) for the...

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