InvestorQ : What is your view on the results announced by IIFL Securities and IIFL Finance, the two group companies of India Infoline where were demerged?
Khushi Patel made post

What is your view on the results announced by IIFL Securities and IIFL Finance, the two group companies of India Infoline where were demerged?

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Arya Nanda answered.
1 year ago
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You must be aware that a few months back, IIFL Holdings was demerged into 3 entities. The NBFC business was continued under the old company, which changed its name to IIFL Finance Ltd. The wealth and AMC business was hived off into a second company (IIFL Wealth Ltd.) while the securities and broking business was hived off into IIFL Securities. Let me run through the key results of each of the companies.

Let me begin with IIFL Securities results. For the Dec-19 quarter, the company reported Rs.139 crore total revenues from the securities business. For the quarter, the company also reported a sharp rise of 45% in the net profits. This sharp rise in net profits was largely driven by a fall in the tax outflow. However, there was an extraordinary loss of Rs.12.9 crore during the quarter. The stock has recently attracted buying interest from the likes of Rakesh Jhunjhunwala and other marquee investors.

Let me now turn to IIFL Finance which also reported numbers during the week. It reported a 78% increase in net profit at Rs 193 crore for the Dec-19 quarter. It had registered a net profit of Rs.108 crore in the year ago period. However, overall income for the period was down by 2% at Rs.583. IIFL Finance had loan book of Rs.36,015 crore as on December 2019. Out of this loan book; home loans constituted 34%, business loans constituted 23%, gold loans accounted for 21% and microfinance was 8%. The company did see improved demand for credit in the quarter and that bodes well for the coming quarters.

Finally, let me talk about IIFL Wealth. IIFL Wealth Management has reported 33% growth in net revenues at Rs.501 crores for the quarter ended December 31, 2019 as compared to Rs.375 crores during the sequential quarter ended September 30, 2019. YOY comparison is not applicable as the demerged company was formed only recently. IIFL Wealth also posted 8.4% sequential growth in net profit of Rs.74 crores for the quarter ended December 31, 2019. IIFL Wealth, which commands among the best valuation premiums in the sector, has reported EPS of Rs.8.40 for the quarter ended December 31, 2019, giving the stock P/E valuation of more than 40 times.

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