India Infoline held its conference call on 21st January 2009 to discuss on the company’s performance for nine months ended December 2008.
Financial Highlights
For the quarter ended December’08. India Infoline (IIL) has report fall of 26% in its consolidated income from operations to Rs 230.14 crore, driven by the fall in its major Equities Brokerage segment along with life insurance commission segment and Marketing & online media segment.
Although Financing and investment segment flared well in this quarter, the fall in segmental margins of the equities brokerage segment and losses in the life insurance distribution and marketing and online media segment at PBIT level has added further slippage to the bottom line, which thus reported a fall of 54% to Rs 29.78 crore.
As of December 31, 2008, the company held cash and cash equivalents of INR 884 crore. Of this, 71% is lying with mutual fund debt schemes, 19% in fixed deposits of reputed public and private sector banks and the balance in bank current accounts.
The debt on the balance sheet as on Dec’08 stood at 160 crore as against Rs 700 crore as on Sep’08. This is because most of the debts were short term debts and the company repaid them during the quarter.
The Board has declared Interim Dividend of Rs 2.80 per equity share of Rs 2 each of the financial year FY 09. The record date for the same is fixed as January 30, 2009.
Business Update
Equity brokerage segment
The market share of the company on the NSE for the quarter under review was marginally lower at 3.6% as compared to 3.89% in the previous quarter. The market share declined as there is no propitiatory trading and arbitrage trading business taken by the company. The company relies purely on retail and institutional broking business.
The average daily volumes for the equity business stood at Rs 1998 crore as compared to Rs 2622 crore in Q2FY09, a decrease of 24% q-o-q.
The commodities broking business has improved by 28% with average daily volumes at Rs 249 crore as compared to Rs 195 crore in Q3FY08.
The company continues to aggressively acquire customers and number of broking customers was up to 5.62 lacs
The Yields in the broking business also increased from 8.84% to 9.47% as on Dec’08.
There are almost 573 brokers and 400 registered sub brokers with the company taking the total to 973 as on Dec’08. There was no employee lay off during the quarter owing to bad market condition.
Life Insurance Distribution
Life Insurance business mobilized first-year premium of Rs 43.20 crore in the quarter under review.
The company has received Insurance broking license from IRDA (Insurance Regulatory and Development Authority) in December 2008.
The company has started selling products for LIC, commencing with Jeevan Aastha and tied up with Max New York Life Insurance for distribution of their products
Retail Consumer Finance
The retail book stood at Rs 760 crore this excludes loan against share of Rs 190 crore and margin financing of Rs 177 crore. But includes personal loan of Rs 190 crore and mortgage loan of Rs 573 crore.
To reduce risk of portfolio (including personal and business loans), the company has exited the unsecured lending businesses, and curtailed the mortgage as well as other lending business.
The company still maintain a cautious stance on lending activities as it expects further softening of real estate prices. NPAs for total portfolio as of 31st Dec were less than 1% of book and are fully provided for.
Going forward, focus is on secured lending business, primarily mortgages
International expansion plans
The company has in place subsidiaries for its global asset management and advisory business in Singapore and USA.
It plans to set up subsidiaries in Dubai, Mauritius and London for undertaking financial services business and subject to necessary regulatory approvals.
The Board has approved fresh investment upto US$10 million in overseas subsidiaries.
The international offices will support the wealth management business as well
Other businesses
The investment banking division of the company has successfully completed two deals during this quarter, with a few more in the pipeline.
Assets under advice of wealth management team are at over US$ 200 million. This business is conducted through a separate subsidiary and is expected to break even over the next 12 to 18 months.
Other Information
A multi-channel network spread over 365 cities and towns comprising 976 business locations
The A1+ ratings on the short term debt programs of India Infoline Ltd and India Infoline Investment Services Ltd was re-affirmed. The rating indicates the highest-credit-quality rating assigned by ICRA to short-term debt instruments. The long-term debt program of India Infoline Limited was assigned a rating of LAA- .
The company had issued 55mn equity warrants (as adjusted for stock split) at an exercise price of Rs. 88 (adjusted for stock split) to promoters and others in July 2007 as per SEBI guidelines. The company received Rs48.4 crore, which was 10% of the subscription amount. The warrants have lapsed unexercised on January 3, 2009. The upfront advance received has been credited to share forfeiture account.
The Company commenced Buy-back of Equity Shares through open market on Stock Exchanges. The Board had earmarked INR98.91 crore towards this buyback through stock exchanges upto a maximum price of INR43.20 per share. As on December 31st, 2008 pursuant to the resolution of the Board of Directors passed at the Meeting held on November 29, 2008 and Public Announcement released on December 5, 2008, the Company had bought Back 1,55,673 equity Shares of (par value) INR 2/- each.