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P o o r s h o w …
India Infoline (IIFL) reported a 37% YoY, 42% QoQ dip in PAT to | 27
crore, much below our estimates. Top-line growth was muted QoQ,
though up 18% YoY at |360 crore. The growth in revenues was
supported by interest income of | 183 crore in Q1FY12 against | 110
crore (Q1FY11) and | 158 crore (Q4FY11). Broking fees of | 134 crore was
down 13% YoY, 19% QoQ. On account of declining yields and uncertain
markets, PAT is seen at |198 crore by FY13E against | 211 crore in FY11.
ƒ Reported yields slip to 3.5 bps...
IIFL has been able to maintain market share at 4%. The broking
yields are consistently trending down due to change in product mix
of markets more in favour of low yielding options segment. IIFL
reported yields dropped to 3.5bps which remained stable above
4.5bps in entire FY11. We believe the contribution of cash segment
to remain low for at least couple of quarters more. We expect IIFL to
maintain its market share of 4% and deliver | 524 crore of broking
fees in FY13E, on account of depressed yields.
ƒ Financing income supporting top-line growth
Financing book which was below | 1000 crore in FY09, shored up to
| 3290 crore in FY11 and now stands at | 3900 crore for Q1FY12.
This surprised us as we expected moderation in this quarter due to
tough market conditions. The extravagant 86% CAGR in financing
book over FY09-11, is expected to moderate down to 33% CAGR
over FY11-13E to | 5850 crore. Loan against equipment and gold
loan form 11% of book, 59% is mortgage while balance is capital
market based. We see financing income to grow 28% CAGR over
FY11-13E to |1005 crore and contribute 58% in FY13E total income.
IIISL, IIFL’s subsidiary is raising | 750 crore at11.9% coupon. This
NBFC drives the financing income for IIFL. We believe higher
coupon rate would pressurise NII for IIFL since it’s a five year NCD.
V a l u a t i o n
We value the core broking business of the company (equity brokerage) at
10x FY13E EPS and 0.7x FY13E BV for financing book and maintain target
of | 80 and recommend HOLD. The near term concerns remain over
falling yields and rapidly growing loan book.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
P o o r s h o w …
India Infoline (IIFL) reported a 37% YoY, 42% QoQ dip in PAT to | 27
crore, much below our estimates. Top-line growth was muted QoQ,
though up 18% YoY at |360 crore. The growth in revenues was
supported by interest income of | 183 crore in Q1FY12 against | 110
crore (Q1FY11) and | 158 crore (Q4FY11). Broking fees of | 134 crore was
down 13% YoY, 19% QoQ. On account of declining yields and uncertain
markets, PAT is seen at |198 crore by FY13E against | 211 crore in FY11.
ƒ Reported yields slip to 3.5 bps...
IIFL has been able to maintain market share at 4%. The broking
yields are consistently trending down due to change in product mix
of markets more in favour of low yielding options segment. IIFL
reported yields dropped to 3.5bps which remained stable above
4.5bps in entire FY11. We believe the contribution of cash segment
to remain low for at least couple of quarters more. We expect IIFL to
maintain its market share of 4% and deliver | 524 crore of broking
fees in FY13E, on account of depressed yields.
ƒ Financing income supporting top-line growth
Financing book which was below | 1000 crore in FY09, shored up to
| 3290 crore in FY11 and now stands at | 3900 crore for Q1FY12.
This surprised us as we expected moderation in this quarter due to
tough market conditions. The extravagant 86% CAGR in financing
book over FY09-11, is expected to moderate down to 33% CAGR
over FY11-13E to | 5850 crore. Loan against equipment and gold
loan form 11% of book, 59% is mortgage while balance is capital
market based. We see financing income to grow 28% CAGR over
FY11-13E to |1005 crore and contribute 58% in FY13E total income.
IIISL, IIFL’s subsidiary is raising | 750 crore at11.9% coupon. This
NBFC drives the financing income for IIFL. We believe higher
coupon rate would pressurise NII for IIFL since it’s a five year NCD.
V a l u a t i o n
We value the core broking business of the company (equity brokerage) at
10x FY13E EPS and 0.7x FY13E BV for financing book and maintain target
of | 80 and recommend HOLD. The near term concerns remain over
falling yields and rapidly growing loan book.
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