Global Economy
Global economy proved to be more resilient than expected, even with notable interest rate hikes by central banks to curb inflation during 2023. This resilience was supported by strong economic activity and the ability to adjust to changing financial conditions. The economys stability was evident through steady job growth and rising incomes, driven by strong consumer demand, increased government expenditure, and higher labour force participation.
As per IMF, global inflation is projected to decline gradually, from 6.8% in 2023 to 5.9% in 2024, and down to 4.5% in 2025. Despite the restrictive interest rates aimed at controlling inflation, households in leading developed nations tapped into savings accumulated during the pandemic, contributing to the unexpected economic momentum. The IMF data shows that global economy expanded by 3.2% in 2023, and this growth rate is anticipated to hold steady through 2024 and 2025. However, several factors such as lag effects of monetary tightening, reduction of fiscal support due to elevated government debt, and inflation still higher than the pre-pandemic levels, along with geopolitical tensions and lower productivity growth, are contributing to this less-optimistic forecast.
Advanced economies are expected to meet their inflation targets sooner than the emerging markets and developing economies. In 2024, advanced economies are expected to grow by 1.7%, with a modest increase to 1.8% in 2025, compared to the 1.6% growth recorded in 2023. This downward trend suggests a normalisation of price levels after recent periods of heightened inflationary pressure. While the headline inflation is predicted to decline slowly, various structural obstacles remain; affecting capital and labour mobility that hinders progress towards higher living standards, especially for middle and lower-income countries.
Emerging markets and developing economies are projected to grow by 4.2% in both 2024 and 2025 - a slight dip from the 4.3% growth observed in 2023.
Indian Economy
Indias economic growth momentum remained on a strong wicket. A sharp recovery in the domestic cyclical sectors of the company such as capex, real estate etc. drove the growth acceleration. Indias economy grew by 8.2% in FY24, exceeding the 7.0% growth observed in FY23 while manufacturing and construction grew by 10% YoY, services grew by 7.6%. On the demand side, investments grew at 9% and offset the slowdown in private consumption. RBI projects India to grow at 7.2% in FY25.
P: Projected
Source: NSO estimates dated May 31, 2024,
RBI (Reserve Bank of India) MPC (Monetary Policy Committee) report dated June 7, 2024
Source: NSO estimates dated May 31, 2024,
RBI (Reserve Bank of India) MPC (Monetary Policy Committee) report dated June 7, 2024
Indias robust growth has allowed the RBI to focus more on bringing down inflation to its 4% target. The progress on containing inflation has been substantial, as the latter fell from 7.4% in July 2023 to 4.9% in March 2024. Core inflation (ex-food, fuel, energy, and gold) has trended below 4% for seven months in a row now. However, the last mile of disinflation is sticky, and food prices remain elevated. RBI projects FY25 inflation at 4.5%. The RBIs MPC maintained a steady policy repo rate of 6.5% during FY24, adhering to its stance of ‘withdrawal of accommodation. There are expectations of continued uncertainties in food prices, highlighting the need for careful monitoring of food inflation.
The growth momentum witnessed in FY24 has been driven by several positive macroeconomic indicators, including increased government emphasis on capital expenditure, upswing in the real estate cycle and heavy thrust on manufacturing and exports. Innovative technology solutions, including digital payments like UPI, formal credit through account aggregator networks, and online tax platforms like FASTag - all have significantly enhanced financial inclusion in India. The volume of digital payment transactions has seen significant growth, surging from 20.71bn in FY18 to 134.62bn in FY23; reflecting a robust Compounded annual growth rate (Cagr) of 45%. As of December 11,2023, digital payment transactions had already reached 116.60bn, indicating that digital payment adoption had sustained the momentum. Governments interim Union Budget for FY25, with its allocation of 1trn for technology financing, aligns well with Indias vision for technological advancement and innovation. High forex reserves covering 100% of external debt, current account deficit (CAD) contained within 2% of GDP and a stable rupee indicate resilient external sector. The economys strength and resilience, coupled with recent reforms, have laid a strong foundation for long-term growth.
Outlook
Going forward, continued momentum in Manufacturing and Construction activity, and the broad-based growth across Services, are expected to boost economic activity in FY25. On the demand side, household consumption is anticipated to strengthen, while prospects for fixed investment are bright due to the expected upturn in the private capital expenditure cycle, improved business sentiments, healthy balance sheets
of banks and corporates, and the governments continued focus on capital expenditure. Macro liquidity conditions will also likely ease and an expected reduction of 50-75bps in the second half of the current fiscal will potentially drive a pick-up in credit growth. Indias economic growth outlook thus remains robust.
Equity Markets
In FY24, Indian Equity markets performed remarkably , aligning with the global uptrend driven by a resilient Indian economy and robust corporate earnings. The Nifty 50 Index posted a 28.6% gain in FY24. Mid and small-cap indices outperformed NIFTY significantly, clocking 60% and 72% returns respectively. Such strong performance placed Indian equities ahead of many emerging market counterparts, reflecting resilience and relative attractiveness. The rally was led by domestic cyclical
sectors such as capex, infrastructure, real estate, hotels, autos and industrials. In FY24, Indias Sensex was one of the top-performing markets among major indices. Compared to FY23, the Sensex rose by 24.6% in FY24, trailing only the Nikkei that rose by 44%, and the S&P 500 that gained 27.9%. In contrast, the Hang Seng Index fell by 18.9% during FY24.
Indias market capitalisation grew by 44% year-over-year (yoy) to 367trn ($4.4trn) as of March 31, 2024, marking the second-highest growth in the past 14 years. This substantial increase positioned India as the fourth-largest market globally, behind the US, China (including Hong Kong), and Japan. The market cap to GDP ratio reached a record high of 124%, as on March 31, 2024. Apart from strong earnings growth, robust institutional flows both foreign and domestic were key enablers of expansion of market multiples.
Market Performance across Equity Indices
Indicator Name : |
Mar-24 : |
1M ago |
3M ago |
12M ago |
1M (%) |
3M (%) |
6M (%) |
12M (%) |
YTD (%) |
Equity Indices |
|||||||||
NIFTY 50 |
22,327 |
21,983 |
21,731 |
17,360 |
1.6 |
2.7 |
13.7 |
28.6 |
2.7 |
NIFTY 500 |
20,255 |
20,090 |
19,429 |
14,558 |
0.8 |
4.3 |
17.1 |
39.1 |
4.3 |
MSCI INDIA |
2,640 |
2,604 |
2,487 |
1,920 |
1.4 |
6.2 |
18.8 |
37.5 |
6.2 |
India Volatility Index (%) |
13 |
16 |
15 |
13 |
(17.6) |
(11.5) |
12.0 |
(0.8) |
(11.5) |
MSCI WORLD |
3,438 |
3,337 |
3,169 |
2,791 |
3.0 |
8.5 |
20.5 |
23.2 |
8.5 |
S&P 500 COMPOSITE |
5,254 |
5,096 |
4,770 |
4,109 |
3.1 |
10.2 |
22.5 |
27.9 |
10.2 |
DOW JONES INDUSTRIALS |
39,807 |
38,996 |
37,690 |
33,274 |
2.1 |
5.6 |
18.8 |
19.6 |
5.6 |
HANG SENG |
16,541 |
16,511 |
17,047 |
20,400 |
0.2 |
(3.0) |
(7.1) |
(18.9) |
(3.0) |
FTSE 100 |
7,953 |
7,630 |
7,733 |
7,632 |
4.2 |
2.8 |
4.5 |
4.2 |
2.8 |
NIKKEI 225 |
40,369 |
39,166 |
33,464 |
28,041 |
3.1 |
20.6 |
26.7 |
44.0 |
20.6 |
On foreign flows, Foreign Institutional Investors (FII) equity inflows in FY24 were quite strong at $25bn vs an outflow of $6bn in FY23. ECB and FCCB flows were also quite strong - $49bn in FY24 vs $27bn in FY23. FX reserves (~ $650bn) are at a comfortable position, covering almost entire external debt. INR has been relatively steady in FY24 (~1.5% depreciation), while its major EM/ DM peers have depreciated more vs USD. Domestic Institutional Investors (DII) net inflows at $25bn have been strong too.
Indias weight in MSCI EM index has increased to 18.3% from 7% in 2012. Chinas weight, on the other hand, after rising to ~39% in 2021(from 8% in 2006) has fallen to 25% currently. India currently has over 370 companies with market cap of over $1bn. As free float rises, we expect more stock additions from India and that will possibly drive Indias weight even higher from current levels.
In September 2023, JP Morgan announced inclusion of Indian Sovereign bonds in the JP Morgan Global Bond Index - Emerging Markets, from June 28, 2024, assigning a 10% weightage. Bloomberg also followed suit and included India in its Bloomberg EM LCY Government Index from January 2025. Cumulatively, inflows to the tune of $25-30bn is expected because of this inclusion. The inclusion of Indian bonds in global indices will ensure lower yields (and hence, lower borrowing costs for companies), stronger INR and a strong BOP position for India.
Net FDI to India in FY24 was only $10.9bn, down 61% from FY23. However, gross FDI was flat at $71bn. In FY24, existing FDI worth $44bn was repatriated back to source countries - an increase of almost 50% YoY, bringing net FDI down. However, Government of Indias (GoIs) manufacturing push, PLI incentives, Make in India Scheme and the West looking to reduce dependence on China are factors that will support FDI inflows.
Outlook on markets
Over the medium to long term, Indian equity markets are in a goldilocks scenario. Indias robust macro-economic stability, sanguine growth outlook, thriving entrepreneurship, improving productivity, rising capital spend, sustained improvement in infrastructure, solid policy support, healthy corporate balance sheets and widening breadth all bode well. Sustained growth in domestic flows, both institutional (principally provident and pension funds) and non-institutional, and buoyancy in profit cycle will likely keep valuations rich over the medium term. Having said that, the sharp run up in the markets in the past 6-12 months has resulted in pockets of excessive valuations. We see more value in large caps especially financials and market leadership will yet again change at some point. Indian equities have delivered superior risk-adjusted returns over the past three decades and we see no reason why it will not do so in the coming decades.
Industry Overview Retail Equity
In FY24, the investor base surpassed the 90mn mark in FY24, indicating a significant increase in new investor registrations. The total count of registered investors reached 92mn by FY24, marking a notable increase from approximately 73mn recorded in FY23. New registrations rose by 42.6% vs the
previous year; reaching 19mn registrations - up from 13mn in FY23. This surge in new investor registrations can be attributed to the markets strong performance throughout FY24, characterised by multiple highs, particularly with the Nifty crossing the 22,000 mark during the year. During FY24, a total of 213 companies were listed on the NSE through initial public offering (IPOs) on the mainboard as well as the Emerge platform, marking a significant increase vs the number of new listings in FY23. The number of new listings more than doubled, reflecting a heightened investor interest in the market during FY24.
Mutual Funds
In FY24, the assets under management (AUM) of the Mutual Fund (MF) industry exceeded 53trn marking a 35.5% increase from the previous year. A large part of the flows came into equity and hybrid schemes. As of March 31, 2024, the total number of folios reached 177.9mn. Among these, the number of folios under equity, hybrid, and solution-oriented schemes - which attracted significant retail investment - stood at approximately 142.4mn. In FY24, while the industrys AUM in equity and equity oriented schemes rose by 55%, that of the debt schemes rose by a moderate 7% only. The increase in tax rates on investments made in debt mutual funds after April 01, 2023 has made it totally unattractive.
The financialisation of savings in India has been gaining momentum, highlighting a growing awareness among investors that financial assets are key to building wealth. As income and expenditure levels continue to rise, theres an increasing need to direct monthly savings toward investment avenues that yield higher returns. The significant inflow of investments into equities reflects a clear shift in investor attitudes, with a greater willingness to take risks in the pursuit of higher returns. This change indicates that more Indians are seeking to grow their wealth through financial instruments, demonstrating a shift from traditional saving methods.
Investor adoption of systematic investment plans (SIPs) has continued to increase, with monthly net inflows reaching approximately 193bn in March 2024. Throughout FY24, total net inflows through SIPs amounted to nearly 2trn - a significant increase from 1.55trn in FY23. This consistent growth in SIP adoption has highlighted the growing preference among investors for regular and disciplined investment strategies.
As of March 2024, SIP assets totalled 10.71trn, representing over 20% of the MF industrys total assets. Additionally, the number of SIP accounts approached 84mn, with approximately 1.7mn new accounts being added each month. It reflects the growing popularity of SIPs among investors and their increasing role in the overall MF industry.
Stock Broking
Investment patterns shifted notably in the last month of FY24, due to heightened market volatility, which caused investor uncertainty. Despite this, the average daily market turnover gained about 55%, reaching 890bn during FY24. The increase in turnover implies that despite instability and unpredictability, trading activity stayed robust, indicating a resilient market environment.
Both index and stock options premium turnover experienced significant growth during FY24. The index options premium turnover increased by 26%, reaching 1,38,196bn vs 1,09,556bn in FY23. Similarly, the stock options premium turnover saw an even higher growth rate of 48%, reaching 13,780bn in FY24 - up from 9,327bn in FY23. These figures reflect a strong upward trend in the Options Trading segment, indicating growing investor interest and activity in the Derivatives market.
In FY24, India saw a notable increase in demat accounts, with an average of 3mn new accounts being added each month. This growth was reflected across both major depositories, CDSL and NSDL, which experienced a 32% year-over-year (yoy) increase, bringing the total number of demat accounts to 151mn - up from 114mn in the previous year.
Demat Accounts
(in mn)
Investment Banking
Globally, deal values experienced a significant decline, dropping from over $5trn in 2021 to $2.5trn in 2023, with deal volumes also decreasing by 17% during the same period. However, there was a significant shift towards growth funding and a revival in Venture Capital transactions. During the year, controlling stake deals increased, portfolio exits through capital markets and IPOs rose, and Private Equity (PE) operating models evolved towards buyouts, platforms, and add-ons. Globally, there was also a decrease in the number of new unicorns.
The IPO activity in India saw a significant resurgence in 2023. In FY24, a total of 78 IPOs raised 676 bn, compared to 39 IPOs raising 530 bn in FY23. Most IPOs were heavily oversubscribed and mean oversubscription was over 35x. 18 IPOs delivered over 100% return on listing. The top 10 IPOs by value creation accounted for nearly 70% of the total market cap accretion, highlighting strong investor interest in larger issues as well. FY24 was thus marked by positive returns, substantial market cap addition, and high investor engagement; setting a promising tone for the IPO market in FY25.
Despite an overall decrease in deal activity, PE transactions continued to outpace traditional Mergers and Acquisitions (M&A). There were 156 mergers and acquisitions among start-ups in CY23, with 127 occurring domestically and several involving international transactions; highlighting the Investment Banking sectors pivotal role in enabling these transactions.
PE investments in India totalled $36.5bn in CY23, representing a substantial 36% drop from the previous year. Despite this decline, the average investment size per deal increased to
$46mn from $42mn last year; indicating a potential shift towards larger opportunities.
The value for bulk and block deals have been rising strongly over the past five years. In FY24, block deals grew by 55% to 5.25trn vs. 3.38trn recorded in FY23. Despite a slight decrease in volume, block deals remained a vital exit strategy for private equity firms. In 2023, the M&A activity involving start-ups totaled 156 deals, primarily domestic transactions with one start-up achieving unicorn status compared to 21 in the previous year. In India, Software as a Service (SaaS) has emerged as the primary sector for creating unicorns, with FinTech closely following, having a total of 16 unicorns during CY23. Bengaluru, NCR, and Mumbai remained the primary hubs for start-up activity in India, accounting for approximately 83% of the total funding.
Source: PWC
Portfolio Management Services (PMS)
Portfolio managers have gained significant advantages from better-organised information, broader distribution networks, and differentiated products. These factors have drawn substantial investment into different portfolio management strategies. These factors, along with the perception of higher returns, have fueled the PMS industrys growth in recent years. Going forward, the PMS industry appears to have a promising future, with a growing number of HNIs and the expectation of generating superior risk-adjusted returns through investments in diversified strategies. Theres also increasing interest from first-time PMS investors, as well as UHNIs and Family Offices allocating more toward well-performing PMSs. The industry has seen a 19% yoy increase in value of assets under PMS; total assets under the PMS crossed the 30trn mark in FY24.
Alternative Investment Funds (AIF)
AIFs are pooled investment vehicles and invest in all categories of financial assets including equities both listed and unlisted, pre-IPO, private equity and venture cap, InvITs and REITs, high yield credit etc. AIFs as a category is less than a decade old, yet has seen a robust AUM growth. As of end FY24, total investments stood at 4,070bn, a growth of over 20%.
Source: SEBI Insurance
Indias insurance sector is on a secular growth path. Over the past two decades, life insurance premiums have grown at a steady 14.1% Cagr. As at end FY24, total life insurance premium collections stood at 3,780bn. Premiums earned in the non-life segment comprising of segments like motor, health, marine, fire, crop etc., totalled 2,897bn. Rising penetration, improving disposable incomes and savings, favourable regulations, better product innovation, increasing awareness of risks are all driving the growth of the sector.
Regulatory Changes
Some of the key regulatory changes in so far as it relates to the segments in which we operate during FY24 are summarized below:
• With effect from July 01, 2023, SEBI has designated certain stock brokers as QSBs (Qualified Stock Brokers). This designation is based on a number of factors including size and scale of operations. QSBs are required to meet enhanced obligations and discharge responsibilities to ensure appropriate governance structure, risk management policy and processes, scalable infrastructure and a proper framework for cyber security and investor services including online complaint redressal mechanism.
• SEBI has taken measures to safeguard customer funds with stockbrokers and clearing members, mandating
daily transfer of funds to Clearing Corporations. This aims to mitigate fund-related risks by placing surplus funds in low-risk instruments and providing independent daily confirmations to investors.
• To minimize the leverage risk and risk to clients funds, SEBI mandated no new Bank Guarantees (BGs) to be created out of clients funds effective from May 01, 2023 and all existing BGs created out of clients funds to be wound down by September 30, 2023.
• SEBI issued new regulations on short selling for both institutional and retail investors, aiming to improve transparency.
• BSE Limited (BSE) and National Stock Exchange of India Limited (NSE), under the guidance of SEBI, have established a technology-driven platform to streamline the process of data backup and repository concerning IPO, FPO (Follow on Public Offer), Rights Issue, and other capital market activities. This platform will serve as a repository for due diligence documents compiled and maintained by merchant bankers for various capital market transactions.
• SEBI introduced Online Dispute Resolution (ODR) as the primary method for resolving disputes in the Indian Securities market. The circular issued by SEBI provides a detailed framework for escalating cases to ODR, selecting ODR institutions, conducting various ODR processes, defining timelines for each process, and determining the associated costs.
• SEBI reduced the timeline for listing shares on stock exchanges after the closure of IPOs from T+6 days to T+3 days. This reduction in timelines - voluntary for public issues opening on or after September 1, 2023, and mandatory for issues after December 1, 2023 - benefits both issuers and investors.
• SEBI, through its Master Circular dated October 16, 2023, has outlined a comprehensive framework for Offer for Sale (OFS) of shares to employees via the stock exchange mechanism. Previously, OFS to the eligible company employees occurred outside the stock exchange mechanism. To enhance efficiency, ease compliance, and reduce costs, SEBI has amended the procedure, allowing promoters to offer shares to employees in OFS through the Stock Exchange Mechanism. This process, effective from February 23, 2024, aligns employee OFS with the retail category on T+1 day.
Company Overview
IIFL Securities has a legacy of over two decades and is a key player in the Indian financials services sector. IIFL Securities provides broking services, financial product distribution, PMS / AIF, institutional research, and investment banking services. Its clientele includes corporates, institutional investors, sovereign wealth funds, international portfolio investors, mutual funds, insurance companies, banks, pension funds, alternative investment funds, trusts, high-net-worth individuals, and retail investors. As at end FY24, the firm had a total AUM of 1,883bn.
Product Offerings - Providing comprehensive solutions for all capital market needs
IIFL Securities has over 100 branches in India and also has 6,000+ partners. Our Companys global presence extends across Singapore, London and New York. The Company has more than 900 clients in the institutional segment and over 3 mn clients in the non-institutional segment. IIFLs institutional research is highly ranked and the team covers over 270 companies.
Strengths
Reputed Brand Identity
Since 1996, being affiliated with the IIFL Group, IIFL Securities has built a strong reputation and customer-centric ethos, consolidating its position as a reliable and trustworthy entity in the industry.
Experienced Leadership and Skilled Team
Under the direction of a highly experienced leadership team, IIFL Securities leverages a methodical and data-centric approach to decision-making. Our Relationship Managers are distinguished by their exceptional academic qualifications and professional expertise, enabling them to address the unique needs of our clients. This dedication to comprehensive research and personalised service ensures that our clients receive well-informed, bespoke financial strategies tailored to achieve their specific objectives and aspirations.
Increased Emphasis on the Investment Banking and Institutional Broking Businesses
IIFL Securities excels in the Investment Banking sector, benefiting from a deep understanding of both customers and markets across various segments. The Company has a experienced team of 100+ employees across sales, research & trading with a proven track record of executing large block placements for financial sponsors, public market funds & promoters.
Access to Diverse Asset Classes and Tailored Investment Services
The Company serves as a one-stop destination for all financial requirements, offering access to various asset classes such as equities, fixed income, commodities, currencies, derivatives, mutual funds, alternative investments, portfolio management services & digital platforms like tradebox, sensibull, grobox, algo trading, etc. This wide range of offerings caters to diverse investment preferences and risk appetites.
Nationwide Presence
With a presence of 6,000+ partners & 100+ branches across pan India, the Company enjoys nationwide market access, facilitating outreach to clients and markets throughout the country. This expansive presence not only boosts brand visibility and fosters trust but also enables the Company to leverage local expertise, forge partnerships, attract talent, ensure regulatory compliance, and establish a foundation for scalability and future growth.
Opportunities |
Threats |
Focusing on the Fast growing HNI Segment |
Cybersecurity |
Focusing on the high-net-worth individuals and affluent segment is an opportunity to penetrate a market with substantial purchasing power. This strategy is anticipated to drive profitability and higher returns on investment. |
Cybersecurity presents a significant threat, with potential risks including data breaches, financial losses, service disruptions, and regulatory consequences. The cyber security breaches pose a significant risk to the Company, potentially compromising sensitive client data and financial information, disrupting trading and critical business operations, and eroding market integrity. |
Untapped Market |
Global Economic Slowdown |
With the expansion of Indian economy and spread of digitalisation, the future of capital market business in India seems promising. Factors such as low financial literacy, limited access to financial services and a burgeoning middle class contribute to this under penetrated market. By leveraging technology, tailoring product offerings to local preferences and educating the potential investors, the Company can enter these markets, expand customer base and contribute to the development of financial markets in these regions. |
Global economic slowdown will have a negative impact on the macro environment. It may also lead to reduced liquidity which may impact the industry s growth rate. |
Harnessing Technology to facilitate best practices and processes |
|
The Company acknowledges the vast potential of leveraging technology to implement best practices and streamline processes. This presents a valuable opportunity to enhance customer experiences, introduce innovative features that contribute to clients financial success, and ultimately upscale revenues. Moreover, automating various operational processes can substantially cut costs, resulting in heightened efficiency and profitability. By embracing this technological opportunity, the Company can position itself as a leader in the industry and foster sustainable growth. |
Operational Review
In FY24, the Company achieved a consolidated revenue growth of 63%, totaling 22,313mn compared to 13,704mn in FY23. The consolidated profit for the period increased by 106% to 5,121mn from 2,480mn in FY23.
The Companys Distribution business revenue saw a significant increase of 59% to 3,869mn in FY24 vs the previous year. This growth in the distribution business has helped the
company to diversify its revenue mix. AUM of the companys AIF business rose to 39bn by end FY24, while that of the PMS business to 24bn.
During the year, the Company completed 59 transactions, including 20 IPOs, 14 Qualified Institutional Placements, 19 advisory/private placement transactions, as well as various advisory transactions, buybacks, offer for sale, and open offers. The company also managed placements of a number of marquee blocks on behalf of sponsors and PE funds.
Financial Performance (in mn)
Year Ended |
||
Particulars |
March 31, 2024 Audited |
March 31, 2023 Audited |
1. Income |
||
a. Interest Income |
3,288.2 |
2,024.9 |
b. Rental income |
192.6 |
173.1 |
c. Fees and commission Income |
18,132.0 |
11,322.8 |
Total Revenue from operations (a)+(b)+(c) |
21,612.8 |
13,520.8 |
2. Other Income |
700.1 |
183.0 |
3. Total Revenue (1+2) |
22,312.9 |
13,703.8 |
4. Expenses |
||
a. Employee benefits expense |
1,480.3 |
3,581.3 |
b. Finance cost |
4,771.4 |
755.5 |
c. Depreciation and amortization expense |
4,570.5 |
668.4 |
d. Fees and commission expense |
1,137.8 |
2,738.7 |
e. Administration and other expense |
3,526.9 |
2,551.2 |
Total Expenses (a+b+c+d+e) |
15,486.9 |
10,295.1 |
5. Profit before tax (3-4) |
6,826.0 |
3,408.7 |
6. Tax Expenses |
||
a. Current Tax |
1,791.7 |
969.3 |
b. Deferred Tax |
(43.3) |
(56.1) |
c. Tax adjustment for prior years |
(55.9) |
(2.7) |
Total Tax Expenses (a+b+c) |
1,692.5 |
910.6 |
7. Profit for the period (5-6) |
5,133.5 |
2,498.1 |
Income
Revenue from Operations
The Companys revenue primarily comprises income from retail and institutional brokerage, investment banking, and distribution across various asset classes.
Interest Income
Interest income constitutes 15% of the Companys consolidated total income. It saw a yoy growth of 62%; reaching 3,288mn in FY24 from 2,025mn in FY23, driven by an increase in the client funding book and interest earned on fixed deposits lying with stock exchanges.
Brokerage & Related Income
Brokerage & related income rose by 58% from 7,600mn in FY23 to 12,017mn in FY24. This growth is attributed to a significant rise in Average Daily Turnover (ADTO), which has increased by 71% from 1,536bn in FY23 to 2,631bn in FY24, and also due to the stellar growth in the Institutional Broking business.
Investment Banking Income
Investment Banking revenues witnessed a strong growth in line with the industry trends. Income in this segment grew by 74% to 2,245mn in FY24 from 1,287 Million in FY23.
Financial Products Distribution Income
Financial Products Distribution (FPD) income, accounting for 17% of the consolidated total income, increased by 59% in FY24. This growth is attributed to focused efforts in acquiring new relationships in the Affluent segment, with FPD AUM rising from 196bn in FY23 to 261bn in FY24.
Other Income
Other income, primarily comprising investment income, interest income on inter-corporate deposits, income tax refunds, and profit resulting from changes in the fair value of investments and property sales.
Expenses Finance Costs
Finance costs, comprising of interest on borrowings, debt securities, and other financial expenses like bank guarantee commissions increased during the year. The increase came on the back of increased working capital requirements and emerging needs of margin funding book.
Fees and Commission Expense
Fees and commission expenses, including sub-brokerage fees, referral fees, and related expenses, amounted to 4,771mn in FY24; reflecting a 74% yoy increase, primarily due to higher revenue generated by partners in FY24 vis-a-vis FY23.
Employee Benefit Expenses
Employee benefit expenses, covering salaries, wages, provident fund contributions, share-based payments, staff welfare, leave encashment, and gratuities, rose during the year due to variable pay/bonus compared to the previous year.
Depreciation, Amortization and Impairment
Depreciation, amortization, and impairment expenses include depreciation of property, plant, and equipment, as well as Amortization/impairment of intangible assets.
Other Expenses
Other expenses, comprising of technology, marketing, advertising, commission expenses, communication, legal and professional charges, office expenses, and electricity etc., increased by 38% compared to the previous year.
Liquidity and Capital Resources
In terms of liquidity and capital resources, the Company consistently maintained liquidity through cash from operations and bank borrowings. As of March 31, 2024, cash, bank balances, and fixed deposits totaled 44,675mn. The company has sufficient cash reserves to fund its capital expenditure and working capital needs.
Segment-wise Performance (in mn)
For the year ended |
||||
Segments |
March 31,2024 |
March 31,2023 |
||
Segment Revenue |
Segment Results |
Segment Revenue |
Segment Results |
|
Capital market activity |
19,404 |
6,610 |
12,402 |
3,187 |
Insurance Broking and ancillary |
2,587 |
382 |
980 |
218 |
Facilities and ancillary |
564 |
(166) |
827 |
4 |
Less: Inter Segment Revenue/unallocated |
(242) |
- |
504 |
- |
Total |
22,313 |
6,826 |
13,704 |
3,409 |
Revenue from capital market activity surged from 12,402mn in FY23 to 19,404mn in FY24, marking a 56% yoy increase. This growth was primarily fueled by the Broking and Investment Banking business.
Revenue from the Insurance Broking and Ancillary segments grew from 980mn in FY23 to 2,587mn in FY24, representing a 164% yoy increase.
In contrast, the revenue from Facilities and Ancillary segments declined from 827mn in FY23 to 564mn in FY24.
Key Financial Ratios
Details of significant changes in key financial ratios (i.e., change of 25% or more as compared to the immediately previous financial year)
Key Ratios |
FY24 |
FY23 |
Variance % |
Debt/Equity Ratio |
0.65 |
0.36 |
79% |
Net Profit Ratio |
23% |
18% |
27% |
Return on Average Net Worth |
33% |
20% |
66% |
Explanation:
Debt Equity Ratio - The debt-to-equity ratio increased from 0.36 in FY23 to 0.65 in FY24, primarily due to an increase in borrowings from 4,858mn as on March 31, 2023 to 11,538mn as on March 31, 2024. Higher borrowings were principally used to grow margin funding book and working capital needs.
Net Profit Ratio and Return on Average Net Worth - The
Net Profit Ratio and Return on Average Net Worth increased mainly due to increase in total profit from 2,480mn in FY23 compared to 5,121mn in FY24.
Business Outlook
Given the tailwinds of a growing economy and the cyclical uptrend in the equity markets, we believe the business environment for the Company is very favourable. While remaining focused on further growing the broking and investment banking businesses, the Company is also building on the gains made in the financial products distribution business. Wealth management is a new area of focus. The goal is to add annuity streams of income to an otherwise cyclical business. We will continue to invest in upgrading technology, people resources and branding to fully capitalize on the current and emerging opportunities.
Risk & Concerns
IIFL Securities, being a Financial services company, faces various internal and external risks including Regulatory Risk, Operational Risk, Technology Risk, Credit Risk, ESG Risk and Liquidity Risk, which could impact its performance and reputation. Effective risk management is crucial to address and mitigate these risks.
The Company has established a comprehensive Enterprise Risk Management (ERM) Policy. This policy aids in identifying, assessing, mitigating, and monitoring risks, thereby safeguarding clients assets, maintaining its reputation, and capitalising on business opportunities.
Please refer to the Directors Report and the Narrative section for details on the Companys Risk Management framework and Risk and Concerns.
Human Resources
The Company prioritises providing its employees with a discrimination-free environment that promotes diversity and inclusion. It acknowledges the diverse characteristics, experiences, requirements, and aspirations of its workforce. The Company promotes employee engagement through robust frameworks, facilitating the development and retention of a highly motivated team. Its mission and strategy are supported by specialised training initiatives, empowering employees to develop technical and behavioural skills essential for their professional and personal growth. The Company is deeply invested in the overall wellbeing of its workforce ensuring holistic growth. As of March 31,2024, the Company employed 1,486 skilled individuals, with women constituting around 23% of the workforce.
For further details, refer to the Social under ESG Overview in the Narrative section.
Internal Controls
The Companys systems are adequate and effective, aligned with the nature and size of its business operations. The Company ensures adherence to applicable statutes and regulations through well-defined processes, guidelines, and procedures. These are regularly reviewed to stay updated with changes in the business environment and relevant laws. The Company maintains a well-defined internal audit framework, covering processes and systems to safeguard assets, prevent and detect errors and frauds, ensure accuracy and completeness of accounting transactions, and timely preparation of reliable financial information. Internal auditors assess the adequacy of internal controls, with their reports reviewed by the Audit Committee. Based on recommendations, necessary actions are taken to enhance systems and processes.
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IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000
IIFL Capital Services Support WhatsApp Number
+91 9892691696
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IIFL Capital Services Limited - Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
ARN NO : 47791 (AMFI Registered Mutual Fund Distributor)
This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.
