IIFL Securities - Company Update - ICICI Securities

IIFL Securities reported a steady performance amid a healthy pace of client acquisition, increase in cash average daily turnover (ADTO). Revenue was steady at Rs. 178.3 crore with retail broking seeing some traction offset by fall in institutional, distribution income. Retail brokerage saw 7% YoY, 9% QoQ growth at Rs. 92 crore, on the back of strong customer acquisition at 75900, improvement in cash ADTO. Cash ADTO surged to Rs. 1540 crore vs. Rs. 1270 crore in Q4FY20. Lockdown impacted distribution of financial products and IB, which were down 29%, 56% to Rs. 21.4 crore, Rs. 1.2 crore, respectively. Institutional broking performance was muted with 16% YoY de-growth to Rs. 28.5 crore. Lower opex supported profit, up 11% QoQ to Rs. 41.5 crore.

Valuation & Outlook

Client acquisition, focus on building AUM remains focus leading to a gradual shift towards stability in cyclical business. Covid has no direct impact on business; though decline in overall volumes impacted. PAT (excluding exceptional gains) is expected to increase at 19% CAGR in FY21-22E. Impact of recent regulations related to intraday trading & distribution would be watched. The company has ~Rs. 700 crore worth of real estate with book value on balance sheet of ~Rs. 350 crore. Monetisation of real estate assets remains upside catalyst to drive one-time gains. Given a beneficiary of strong growth in clients and cash ADTO witnessed in industry, we maintain BUY rating with TP at Rs. 46, valuing the stock at ~6.8x FY22E EPS.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_IIFLSec_CoUpdate_Jul20.pdf

Source : Equity Bulls

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