IIFL Finance (IIFL) Q4 11/12 earnings summary

Executive summary

• FY12 consolidated revenue rose 28% YoY to ₹18.9bn and EBITDA rose 29.2% to ₹7.8bn, while higher interest costs weighed on earnings.

• Credit and finance became the largest revenue stream, contributing 58% of total income; the loan book more than doubled to ₹67.5bn.

• Broking and distribution faced contrasting trends: equity broking income declined amid weak markets and lower yields, while marketing and distribution income increased 31.9% YoY.

Financial highlights

• Consolidated total income was ₹18,864.7m in FY12 versus ₹14,739.4m in FY11; profit before tax fell to ₹1,995.2m from ₹3,127.9m.

• Consolidated net profit was ₹1,360.7m versus ₹2,147.3m; reported basic EPS was ₹4.58 versus ₹7.33 and diluted EPS was ₹4.06 versus ₹6.46.

• Standalone revenue was ₹6,246.3m versus ₹7,995.5m and net profit was ₹633.0m versus ₹1,223.6m; FY12 included a ₹143.6m exceptional gain from a slump sale.

• Consolidated finance costs rose to ₹5,043.1m from ₹2,358.0m, reflecting the increased cost of funding the expanding lending business.

Outlook and guidance

• Broking outlook remained sensitive to macro conditions, rupee movements and policy direction; commodity and currency volumes were expected to keep growing.

• Mortgage, gold and healthcare-equipment lending were expected to benefit from favorable demographics, rising disposable income and credit under-penetration; stable or lower rates and easier liquidity were expected to support demand.

• Financial-product distribution was expected to grow steadily, supported by demand for fixed income, real estate, structured products and gold; the industry was seen as positioned for sustained long-term growth after regulatory changes.

• A diversified business model was expected to support participation in Indian financial-services growth despite global turmoil, tighter regulation and cyclical economic weakness.