For Private Circulation Only.

FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.
Kotak Institutional Equities Research
kotak.research@kotak.com
Mumbai: +91-22-4336-0000
IIFL Holdings PAT up 65% yoy
IIFL Holdings reported PAT of `1.09 bn, up 65% yoy and 24% ahead of our estimate. Overall
income (including net interest income) was up 36% yoy at `5.4 bn on the back of 34% yoy
growth in NII, 33% yoy growth in capital market-related income and 136% yoy growth in
wealth-management income. Insurance-distribution income was down 45% yoy, the only weak
segment in the results.
Improvement in operating leverage boosted earnings growth; operating cost to NII ratio
reduced to 65% from 66% in 1QFY15 and 70% in 2QFY14.
Segmental PBT increased by 72% to `1.7 bn, primarily driven by disproportionate growth in
broking and distribution. The share of NBFC business was down to 64% of segmental PBT from
74% in 2QFY14.
Revision in estimates, retain BUY
We are raising our earnings estimates for IIFL Holdings by 8% in FY2015 and 1-2% for FY2016-
17E. Key changes - (1) we are raising our estimates for the wealth-management business, (2)
tweaking down our broking yields estimates, (3) reducing our loan-book forecasts by 2-4% and
(4) factoring higher operating leverage. We retain our SOTP-based price target of `175 for IIFL
Holdings. At our price target, the stock will trade at 12X PER on a fully diluted basis. Strong
earnings momentum will drive further rerating of the stock. The business is vulnerable to
volatility in capital markets.
High growth in the broking business
IIFL reported a 21% qoq rise in broking volumes compared to 17% qoq growth in equity
market volumes on the BSE and NSE. Consequently, calculated market share increased to 3%
from 2.9% qoq. However, the company seems to have made a shift to the low-yielding F&O
segment from cash as indicated by a reduction in commission rates to 2.3 bps in 2QFY15 from
2.6 bps in 1QFY15.





IIFL Holdings (IIFL)
Banks/Financial Institutions
Company in a sweet spot, retain BUY. IIFL Holdings reported higher-than-expected
earnings due to a strong performance across all three segments. Strong commissions
and stable market share in the broking business, high (136% yoy and 45% qoq)
growth in the wealth-management business and steady loan book growth and NIM
expansion in the NBFC business were the main drivers. Insurance distribution was the
only weak segment in 2QFY15. We raise estimates by 2-8% and retain BUY with a
target price of `175.


BUY
OCTOBER 22, 2014
RESULT
Coverage view: Attractive
Price (`): 149
Target price (`): 175
BSE-30: 26,576


QUICK NUMBERS
IIFL Holdings PAT
grew 65% yoy;
revenue grew 36%
yoy
Capital market-
related income
grew 33% yoy
Retain BUY; target
price: `175
(unchanged)




Nischint Chawathe
nischint.chawathe@kotak.com
Mumbai: +91-22-4336-0887

M.B. Mahesh, CFA
mb.mahesh@kotak.com
Mumbai: +91-22-4336-0886

Geetika Gupta
geetika.gupta@kotak.com
Mumbai: +91-22-4336-0888





India Infoline
Stock data Forecasts/Valuations 2014 2015E 2016E
52-week range (Rs) (high,low) EPS (Rs) 9.4 14.0 16.5
Market Cap. (Rs bn) EPS growth (%) 1.6 49.3 17.5
Shareholding pattern (%) P/E (X) 15.9 10.7 9.1
Promoters 30.7 NII (Rs bn) 8.7 9.8 11.9
FIIs 44.4 Net profits (Rs bn) 2.8 4.1 4.9
MFs 0.1 BVPS 73.9 83.6 95.2
Price performance (%) 1M 3M 12M P/B (X) 2.0 1.8 1.6
Absolute (4.3) 16.3 166.0 ROE (%) 14.0 18.5 19.1
Rel. to BSE-30 (2.5) 12.6 109.1 Div. Yield (%) 2.0 2.4 2.8
Company dat a and valuat ion s ummar y
161-52
45.1


Banks/Financial Institutions IIFL Holdings
2 KOTAK INSTITUTIONAL EQUITIES RESEARCH
Overall income from capital markets was up `1.11 bn from `1 bn in 1QFY15 and our
estimate of `871 mn. Strong broking and investment banking income was the key driver
even as the commodity broking business was weak. Broking income (estimated) was up 64%
yoy and 7% qoq to `1.04 bn. We expect IIFLs broking revenues to grow by about 48% yoy
in FY2015 and 20% CAGR over FY2015-17. IIFLs overall earnings will remain sensitive to
volatility in cash market volumes.
Exhibit 1: IIFL Holdings - quarterly financial statement
March fiscal year-ends, 2QFY14-2QFY15 (` mn)
2QFY15 2QFY15 E 2QFY14 1QFY15 2QFY15 E 2QFY14 1QFY15 1HFY15 1HFY14 ( % ch g . ) FY20 15 E
Quar t er ly f in an cials
To t al in co me 8 , 9 37 7, 744 6 , 8 34 7, 9 11 15 31 13 16 , 8 48 13, 5 9 8 24 34, 0 9 6
Broking and related income 1,097 871 825 1,073 26 33 2 2,170 1,861 17 4,538
Equity brokerage 1,047 781 638 983 34 64 7 2,030 1,371 48 4,035
Distribution of MFs 30 50 50 50 (40) (40) (40) 80 150 (47) 188
Commodities brokerage 20 40 137 40 (50) (85) (50) 60 340 (82) 315
Distribution (insurance etc) 1,313 1,070 912 992 23 44 32 2,305 1,595 45 5,802
Insurance distribution 253 320 462 261 (21) (45) (3) 514 763 (33) 2,052
Loan distribution/ wealth
management
1,060 750 450 731 41 136 45 1,791 832 115 3,750
Financing income 6,491 5,787 5,069 5,830 12 28 11 12,321 9,843 25 23,457
Merchant banking income 20 20 240 (92) 200
Other income 16 15 28 16 7 (42) (2) 32 59 (45) 100
Operating expenses 3,559 3,050 2,814 3,056 17 26 16 6,615 5,816 14 13,488
Direct expenses 930 750 732 768 24 27 21 1,698 1,628 4 2,161
Employees expenses 1,611 1,400 1,225 1,356 15 32 19 2,967 2,468 20 5,833
Administration expneses 1,018 900 857 932 13 19 9 1,950 1,720 13 5,494
EBDITA 5,378 4,694 4,020 4,855 15 34 11 10,233 7,782 31 20,608
Depreciation 148 150 180 148 (1) (18) - 296 355 (17) 779
EBITA 5,230 4,544 3,840 4,707 15 36 11 9,937 7,427 34 19,829
Interest 3,491 3,200 2,830 3,261 9 23 7 6,752 5,491 23 13,642
PBT 1,739 1,344 1,011 1,446 29 72 20 3,185 1,936 65 6,188
Taxation 577 430 320 471 34 80 22 1,048 597 76 1,869
PAT bef. minority interest 1,162 914 691 975 27 68 19 2,137 1,339 60 4,319
Minority interest 66 30 26 36 120 159 85 102 41 146 172
PAT 1,096 884 665 939 24 65 17 2,035 1,298 57 4,147
EPS (Rs) 4 2 3 61 16 7 4 53 14
Ot h er d et ails
IIFL avg. daily vol. (Rs bn) 73 60 60 21 21 76
Market share (reported) 3.0 3.4 2.9 3.3
Overall margins (bps) 2.3 1.7 2.6 2.1
Seg men t al r es ult s ( Rs mn )
PBT 1,739 1,010 1,445 72 20 3,184 2,168 47
Broking and related income 378 109 350 246 8 728 548 33
Finance 1,118 754 996 48 12 2,114 1,353 56
Distribution and marketing 242 119 96 103 153 338 210 61
( % ch g . )

Source: Company, Kotak Institutional Equities estimates
Wealth management drives distribution income
IIFL Wealth reported income of `1 bn compared to `554 mn in 2QFY14 and `732 in
1QFY15. While this business has been in high-growth mode, the sharp rise is a surprise. PAT
margin (in this segment) increased to 25% from 21% in 2QFY14 and 20% in 1QFY15. The
company has active assets under advice of `280 bn (in addition to mutual fund assets) of
`200 bn. PAT margin was about 24 bps of assets under advice (on an annualized basis,
excluding assets under custody).
Wealth management business tends to be seasonal; it is typically weak in the first half and
picks up towards the end of a financial year. As such, the activity in this segment will be
high. However, given the strong performance in 1HFY15, we expect 10% increase in wealth
management income between 1HFY15 and 2HFY15. On a high base, we expect 12-15%
growth in income from this segment over FY2016-17.



IIFL Holdings Banks/Financial Institutions
KOTAK INSTITUTIONAL EQUI TIES RESEARCH 3
IIFLs insurance distribution business remains weak
This segment seems to be ignored due to focus on wealth/investment management at IIFL
and challenges in selling traditional policies. Our discussion with insurance companies
suggest that the company will like to focus on agency and banking channels; low
persistence in the third-party channels discouraged the company from getting more assertive
in this segment. IIFL reported income of `240 mn, down from `462 mn in 2QFY14, stable
qoq. We expect volumes in this segment to increase sharply in 2H, in line with seasonal
trends.
Loan growth moderates
IIFL Finance reported a loan book of `137 bn, up 33% yoy and 6% qoq. Mortgage loans
(home loans and LAP) were up 6% qoq while gold loans were stable qoq. We expect
mortgage business to grow by 23% CAGR between FY2014 and FY2017E and largely drive
22% loan growth for IIFL Finance. Share of mortgages will likely remain stable at 48% of
total loans. IIFLs gold loan book has been stable qoq, we expect busi ness momentum in
gold loans to pick up in FY2016E. Recent guidelines on loans against shares will put pressure
on this segment (14% of total) in the medium term, in our view; this segment increased to
`19 bn in 2QFY15 from `17 bn in 1QFY15.
NIM (calculated) expanded to 7.8% in 2QFY15 from 7.5% in 1QFY15. RoA was stable qoq
at 2.3%, higher leverage has driven 16.7% annualized RoE.
IIFL Finance reported leverage (loan book/ equity) of 7.4X in 2HFY15 and may need to raise
capital if growth momentum remains high. The company has set up a housing finance
subsidiary; incremental housing business is booked in this subsidiary. The housing finance
company can operate at a higher leverage as the risk of the underlying assets is lower as well.





Banks/Financial Institutions IIFL Holdings
4 KOTAK INSTITUTIONAL EQUITIES RESEARCH
Exhibit 2: IIFL Finance- quarterly data
March fiscal year-ends, 2QFY14-2QFY15 (` mn)
2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 YoY ( %)
I ncome s tatement ( Rs mn)
Interest income 4,495 4,756 4,903 5,335 5,823 30
Interest expenses 2,706 2,894 2,889 3,165 3,382 25
Net i nteres t i ncome 1, 789 1, 862 2, 014 2, 170 2, 441 36
Other income 302 206 350 242 305 1
Provisions 240 118 230 169 253 5
Operati ng expens es 1, 104 1, 156 1, 192 1, 230 1, 389 26
Employee expenses 409 405 441 491 550 34
Other operating expenses 589 659 662 648 739 25
Depreciation 106 92 89 91 100 (6)
PBT 747 794 942 1, 013 1, 104 48
Tax 254 234 332 331 351 38
PAT 493 560 610 682 753 53
Outs tandi ng l oan book ( Rs bn) 99 100 108 124 130 31
Mortgages (Rs bn) 49 52 51 60 63 29
Gold loan (Rs bn) 32 31 39 43 43 33
Others (Rs bn) 18 17 18 22 24 34
Loans outside balance sheet (Rs bn) 5 4 7 6 7 64
Loans under management (Rs bn) 104 104 115 130 137 33
Key rati os ( %)
NIM - KS Estimate 7.4 7.5 7.7 7.5 7.8
Reported rati os
NIM 7.1 7.0 7.5 7.3 7.7
Spread 6.5 6.3 6.7 6.7 6.8
Loan yield 18.3 18.3 18.4 18.3 18.0
Cost of funds 11.8 12.0 11.7 11.6 11.2
CAR 21.0 20.3 17.7 16.3 17.1
As s et qual i ty
Gross NPL (Rs mn) 659 835 939 988 1,250
Net NPL (Rs mn) 302 401 363 280 390
Gross NPL (%) 0.6 0.8 0.9 0.8 1.0
Net NPL (%) 0.2 0.4 0.3 0.2 0.3
Notes:
(a) Other operating expenses for 1QFY15 includes provisions for the quarter, the break-up for the same is not available.

Source: Company, Kotak Institutional Equities





IIFL Holdings Banks/Financial Institutions
KOTAK INSTITUTIONAL EQUI TIES RESEARCH 5
Exhibit 3: IIFL Wealth Management quarterly data
March fiscal year-ends, 2QFY14-2QFY15 (` mn)
2QFY14 1QFY15 2QFY15 YoY ( %) QoQ ( %)
I ncome s tatement
Income from operations 547 728 1,043 91 43
Other income 7 4 17 143
Total income 554 732 1,060 91 45
Total expenses 348 524 620 78 18
Employee expenses 182 270 301 65 11
Other expenses 166 254 319 92 26
EBITDA 206 208 440 114 112
Interest 25 5 26 4 420
Depreciation 2 2 2
PBT 179 201 412 130 105
Tax 62 58 146 135 152
PAT before minority interest 117 143 266 127 86
Total assets under advice (Rs bn) 660 740 12

Source: Company, Kotak Institutional Equities
Exhibit 4: IIFL Holdings: NBFC drives highest value
SOTP-based valuation, March fiscal year-ends, 2016E
Val uati on
( Rs mn) ( Rs / s hare) Comments
NBFC 31,803 107 1.4X PBR FY2016E
Broking 9,865 33 12X PER FY2016E
Wealth management (75% stake) 6,941 23 12X PER FY2016E
Insurance distribution 2,730 9 12X PER FY2016E
Total 51, 338 173

Source: Company, Kotak Institutional Equities estimates

Exhibit 5: Equity market volume growth moderated in 2QFY15
Average daily volumes on BSE and NSE, March fiscal year-ends, 2008-2014,1Q FY15 and 2QFY15 (` bn)
BSE NSE Total YoY F&O- NSE YoY Total vol . YoY
Peri od ( Rs bn) ( Rs bn) ( Rs bn) ( %) ( Rs bn) ( %) ( Rs bn) ( %)
2008 62 144 205 78 530 77 735 77
2009 45 113 158 (23) 453 (15) 611 (17)
2010 56 168 224 41 717 58 941 54
2011 44 141 184 (18) 1,148 60 1,332 42
2012 26 113 139 (25) 1,269 11 1,408 6
2013 22 108 130 (6) 1,268 1,398 (1)
2014 21 112 133 2 1,530 21 1,663 19
1QFY15 37 188 226 79 1,851 20 2,077 25
2QFY15 33 169 202 50 2,230 35 2,432 37
Vol umes i n cas h market

Source: BSE, NSE, Kotak Institutional Equities






Banks/Financial Institutions IIFL Holdings
6 KOTAK INSTITUTIONAL EQUITIES RESEARCH
Exhibit 6: Equity market volumes have been volatile over last 2 decades
Volumes on BSE and NSE, March fiscal year-ends, 1996-2014,1Q FY15 and 2QFY15 (` bn)
(100)
-
100
200
300
400
500
-
400
800
1,200
1,600
2,000
2,400
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
1
Q
F
Y
1
5
2
Q
F
Y
1
5
Volumes on BSE & NSE (CM) (LHS)
Volumes on NSE-F&O (LHS)
Volume growth on BSE & NSE (CM) (RHS)

Source: BSE, NSE, Kotak Institutional Equities
Exhibit 7: We expect strong growth in loan book
Loan book break-up, March fiscal year-ends, 2010-17E (` bn)
-
50
100
150
200
250
2010 2011 2012 2013 2014 2015E 2016E 2017E
Mortgage loans Gold loans Others

Source: Company, Kotak Institutional Equities estimates




IIFL Holdings Banks/Financial Institutions
KOTAK INSTITUTIONAL EQUI TIES RESEARCH 7
Exhibit 8: IIFL Holdings is trading at 9X one-year forward EPS
IIFL Holdings - Rolling PER and PBR (X)
-
5
10
15
20
25
O
c
t
-
0
8
F
e
b
-
0
9
J
u
n
-
0
9
O
c
t
-
0
9
F
e
b
-
1
0
J
u
n
-
1
0
O
c
t
-
1
0
F
e
b
-
1
1
J
u
n
-
1
1
O
c
t
-
1
1
F
e
b
-
1
2
J
u
n
-
1
2
O
c
t
-
1
2
F
e
b
-
1
3
J
u
n
-
1
3
O
c
t
-
1
3
F
e
b
-
1
4
J
u
n
-
1
4
O
c
t
-
1
4

Source: Company, Bloomberg, Kotak Institutional Equities estimates




Banks/Financial Institutions IIFL Holdings
8 KOTAK INSTITUTIONAL EQUITIES RESEARCH
Exhibit 9: IIFL Finance key ratios, growth rates and financial statements
March fiscal year-ends, 2012-17E
2012 2013 2014 2015E 2016E 2017E
Key rati os ( %)
Interest yield (%) 17.7 20.3 18.1 17.2 15.9 15.8
Interest cost (%) 11.7 12.0 12.1 11.6 10.9 10.9
Spread (%) 6.0 8.3 6.1 5.6 5.0 4.9
NI M ( %) 8. 1 9. 5 7. 2 7. 0 6. 4 6. 4
Loan growth (%) 105.2 40.7 14.6 25.7 26.8 14.8
Income on investments (%) 5.4 2.0 2.0 2.0 2.0 2.0
Other interest yield (%) 3.2 11.5 17.3 15.0 15.0 15.0
Opex/ loans (%) 5.9 6.4 4.6 4.0 3.8 3.8
Credit cost/ loans (%) 0.5 0.8 0.8 0.5 0.5 0.5
PAT / average loans (%) 2.1 2.3 2.1 2.4 2.1 2.1
Du Pont Anal ys i s ( % of total as s ets )
NII/ assets 7.0 8.4 6.5 6.4 6.0 6.0
Other income/ assets 1.1 0.9 1.1 1.0 0.9 0.9
Provisions/ assets 0.5 0.7 0.7 0.5 0.5 0.5
Opex/ assets 5.1 5.6 4.1 3.7 3.5 3.5
PBT/ assets 2.6 3.0 2.7 3.3 3.0 2.9
(1-tax rate) 0.7 0.7 0.7 0.7 0.7 0.7
PAT/ as s ets 1. 8 2. 0 1. 8 2. 2 2. 0 2. 0
Average assets/ average equity (X) 4.2 6.2 7.2 7.5 7.9 8.0
PAT/ average equi ty 7. 6 12. 7 13. 3 16. 5 15. 8 15. 8
Profi t and l os s s tatement ( Rs mn)
Interest income 8,878 16,534 18,491 21,149 24,685 29,414
Interest expenses 4,798 8,776 11,109 12,567 14,702 17,549
Net interest income 4,080 7,758 7,382 8,582 9,983 11,866
Other income 657 838 1,204 1,313 1,512 1,802
Profit on sale of investments 170 100 119 90 60 60
Dividends 36 20
Other income 451 718 1,085 1,223 1,452 1,742
Processing fees 345 350 455 592 769 1,000
Admin charges 57 50 60 78 101 132
Other interest income 49 318 570 554 581 610
Provisions 263 630 768 615 776 932
Operating expenses 2,973 5,229 4,704 4,916 5,821 6,990
Employee expenses 1,093 1,795 1,668 1,743 2,064 2,479
Other opex 1,730 3,094 2,650 2,769 3,279 3,938
Depreciation 150 340 386 403 478 574
PBT 1, 501 2, 737 3, 114 4, 365 4, 897 5, 745
Tax 447 850 1,005 1,409 1,580 1,854
PAT 1, 054 1, 887 2, 109 2, 956 3, 317 3, 891
Bal ance s heet ( Rs mn)
Fixed assets 772 1,200 1,500 1,800 2,250 2,813
Investments 6,071 6,000 6,000 3,000 3,000 3,000
DTL 126 150 150 150 150 150
Cash and bank 2,537 3,000 3,600 3,780 3,969 4,167
Loan book 67,500 95,000 108,900 136,900 173,575 199,244
Other assets 775 2,000 1,000 1,200 1,440 1,728
Total assets 77,798 107,350 121,150 146,830 184,384 211,102
Borrowings 59,384 86,515 97,831 118,837 150,926 171,067
Provisions 480 2,000 2,500 3,125 3,906 4,883
Other current liabilities 3,487 3,500 4,375 5,469 6,836 8,545
Total liabilities 63,350 92,015 104,706 127,430 161,668 184,494
Networth 14,448 15,335 16,444 19,400 22,716 26,607

Source: Company, Kotak Institutional Equities estimates






IIFL Holdings Banks/Financial Institutions
KOTAK INSTITUTIONAL EQUI TIES RESEARCH 9
Exhibit 10: IIFL Holdings key ratios and growth rates
March fiscal year-ends, 2012-17E (%)
2012 2013 2014 2015E 2016E 2017E
Key parameters
Volume in equity markets (Rs bn) 344,336 347,991 411,902 576,663 691,995 830,394
IIFL's volumes (Rs bn) 13,131 12,555 13,903 19,104 22,925 27,510
Per day (Rs bn) 57 55 60 82 99 119
Market share (%) 3.8 3.6 3.4 3.3 3.3 3.3
Commission yield (bps) 3.56 3.22 1.96 2.11 2.11 2.11
Key rati os
Yield on loans (%) 17.7 20.3 18.1 17.2 15.9 15.8
Cost of borrowings (%) 11.7 12.0 12.1 11.6 10.9 10.9
Spread (%) 6.0 8.3 6.1 5.6 5.0 4.9
Total operating costs/ total income (%) 57.4 46.8 39.5 37.7 37.5 37.2
PBT margins (%) 10.3 15.0 14.8 18.1 18.2 18.2
YoY growth ( %)
Total revenues 28 42 6 20 17 17
Brokerage commission (22) (14) (32) 48 20 20
Life insurance distribution fees 3 2 4 2 (13) 24
Media income 76 67 12 16 19 18
Operating costs 27 16 (10) 15 17 16
EBIT 27 82 24 26 18 18
Interest and finance charges 114 72 33 18 18 19
Profit before tax (38) 106 5 48 17 18
Net profit (40) 115 2 49 18 17
Dividend (60) 119 2 18 18 17
EPS (41) 111 2 49 18 17
Growth i n bal ance s heet l i ne i tems
Total assets 54 38 11 20 23 11
Shareholders equity 5 12 12 13 14 14
Contri buti on to total revenues ( %)
Commission on equity broking 24.9 15.2 9.6 11.8 12.1 12.4
Brokerage in commodities 2.8 2.4 1.6 0.9 0.9 0.8
Fees earned on distribution (MF) 1.1 0.9 0.8 0.6 0.5 0.6
Life insurance commissions 4.8 3.5 3.4 2.9 2.1 2.3
Other mortgage and loan distribution 2.7 6.0 7.8 11.0 10.5 10.0
Interest earned on margin trading/ finance income 58.0 68.2 71.5 68.8 70.0 70.5
Merchant banking income 0.3 0.8 0.6 0.4 0.3
Media and other income 5.2 3.6 4.0 3.1 3.3 3.0
Du pont anal ys i s ( % of average as s ets )
Net brokerage revenue 3.3 1.2 0.9 1.4 1.3 1.4
Income from distribution 2.0 2.5 2.5 3.1 2.7 2.7
Other income 15.3 17.0 15.8 15.5 15.2 15.3
Operating costs 18.2 17.1 16.1 16.1 15.5 15.6
(1-tax rate) 67.3 69.8 69.4 69.8 69.8 69.0
RoA ( %) 1. 7 2. 5 2. 1 2. 7 2. 6 2. 6
Average assets/ average equity (X) 4.6 6.1 6.7 6.9 7.3 7.5
RoE ( %) 7. 6 15. 1 14. 0 18. 5 19. 1 19. 6

Source: Company, Kotak Institutional Equities estimates





Banks/Financial Institutions IIFL Holdings
10 KOTAK INSTITUTIONAL EQUITIES RESEARCH
Exhibit 11: IIFL Holdings income statement and balance sheet
March fiscal year-ends, 2012-17E (` mn)
2012 2013 2014 2015E 2016E 2017E
Cons ol i dated i ncome s tatement
Total revenues 18,812 26,653 28,369 34,096 39,976 46,955
Commission on equity broking 4,677 4,041 2,732 4,035 4,842 5,810
Brokerage in commodities 530 635 450 315 346 381
Fees earned on distribution (MF) 200 250 235 188 207 259
Life insurance commissions 906 926 962 979 851 1,057
Wealth management/ distribution 500 1,600 2,200 3,750 4,200 4,700
Interest income 10,903 18,167 20,272 23,457 27,965 33,080
Media income 975 963 1,125 1,073 1,316 1,418
Merchant banking income 50 240 200 150 150
Other income 72 71 154 100 100 100
Operating costs 10,795 12,486 11,207 12,870 15,006 17,449
Brokerage/ direct expenses 2,584 3,337 1,879 2,161 2,593 3,060
Business promotion and marketing 563 893 215 247 289 338
Staff expenses 4,917 5,335 4,943 5,833 6,708 7,714
Administrative expenses 2,731 2,921 4,170 4,629 5,416 6,337
Provisions 231 631 760 618 776 932
EBITDA 7,787 13,536 16,402 20,608 24,193 28,574
Depreciation/Amortization 803 840 677 779 857 942
EBIT 6,984 12,696 15,725 19,829 23,337 27,632
Interest and finance charges 5,044 8,691 11,533 13,642 16,078 19,075
Profit before tax 1,940 4,005 4,192 6,188 7,259 8,557
Taxation 635 1,211 1,284 1,869 2,193 2,653
Net profit 1,306 2,794 2,909 4,319 5,066 5,904
Minority interest in loss/profit 40 72 132 172 193 217
Net profit for appropriation 1,266 2,722 2,777 4,147 4,874 5,687
Dividend 405 885 903 1,064 1,251 1,459
Adjusted number of shares 289 295 296 296 296 296
EPS (Rs) 4.4 9.2 9.4 14.0 16.5 19.2
EPS -fully diluted (Rs) 4.4 9.2 9.4 12.8 15.0 17.5
DPS (Rs) 1.4 3.0 3.0 3.6 4.2 4.9
DPS -fully diluted (Rs) 1.4 3.0 3.0 3.3 3.9 4.5
Dividend payout ratio(%) 39 38 38 30 30 30
BVPS (Rs) 60.7 66.4 73.9 83.6 95.2 108.6
BVPS -fully diluted (Rs) 60.7 66.4 73.9 76.4 86.9 99.1
Consoidated balance sheet (Rs mn)
Goodwill (on consolidation) 332 332 327
Net owned assets 4,902 5,523 4,632 4,353 3,797 3,154
Current Assets 85,581 113,905 130,497 32,830 37,360 36,315
Cash and bank balance 8,205 13,571 13,593 26,951 31,305 30,078
Loans and advances 65,810 95,000 110,344 136,900 173,575 199,244
Total assets 94,992 131,045 145,570 174,083 214,732 238,713
Borrowings 59,816 95,750 105,201 130,000 165,000 185,000
Current liabilities & prov. 24,121 15,374 18,422 19,306 21,543 21,543
Total liabilities 83,937 111,124 123,623 149,306 186,543 206,543
Shareholders equity 17,541 19,586 21,874 24,777 28,189 32,170
Paid-up capital 578 590 592 592 592 592
Reserves and surplus 16,963 18,996 21,282 24,185 27,596 31,577

Source: Company, Kotak Institutional Equities estimates





KOTAK INSTITUTIONAL EQUI TIES RESEARCH 11
Disclosures
"I, Nischint Chawathe, hereby certify that all of the views expressed in this report accurately reflect my personal views about
the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be,
directly or indirectly, related to the specific recommendations or views expressed in this report."





Ratings and other definitions/identifiers
Definitions of rating
BUY. We expect this stock to deliver more than 15% returns over the next 12 months.
ADD. We expect this stock to deliver 5-15% returns over the next 12 months.
REDUCE. We expect this stock to deliver -5-+5% returns over the next 12 months.
SELL. We expect this stock to deliver <-5% returns over the next 12 months.
Our target prices are also on a 12-month horizon basis.
Other definitions
Coverage view. The coverage view represents each analysts overall fundamental outlook on the Sector. The coverage view will consist of one of the following
designations: Attractive, Neutral, Cautious.
Other ratings/identifiers
NR = Not Rated. The investment rating and target price, if any, have been suspended temporarily. Such suspension is in compliance with applicable regulation(s)
and/or Kotak Securities policies in circumstances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or strategic transaction
involving this company and in certain other circumstances.
CS = Coverage Suspended. Kotak Securities has suspended coverage of this company.
NC = Not Covered. Kotak Securities does not cover this company.
RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and price target, if any, for this stock, because there is not a sufficient
fundamental basis for determining an investment rating or target. The previous investment rating and price target, if any, are no longer in effect for this stock
and should not be relied upon.
NA = Not Available or Not Applicable. The information is not available for display or is not applicable.
NM = Not Meaningful. The information is not meaningful and is therefore excluded.








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