Description
This is a documentation is about company analysis of Indiabulls financial sevices
Industry Analysis
1. Industry trends:
A non-bank financial institution (NBFI) is a financial institution that does not have a full banking license or is not supervised by a national or international banking regulatory agency. NBFIs facilitate bank-related financial services, such as investment, risk pooling, contractual savings, and market brokering. As the economic recovery takes a fragile hold, several powerful market trends are significantly altering the economics of the financial services industry. There are many forces at play—margin pressure, regulatory changes, globalization and complexity, and fast-moving technology innovation. Tackling these trends would be a challenge. Margins continue to be under pressure as asset values decline, net inflows for assets under management remain low, and investors continue to press for lower expense ratios. On the regulatory front, the push in the U.S. and Europe to increase transparency and risk management is driving up the costs of compliance. Also increased globalization and complexity mean that financial institutions need to offer a wider array of investment strategies and increasingly complex products (for example, OTC derivatives) to a global client base. Finally, technology innovation such as cloud computing and the need for on-demand data is speeding upgrade cycles and pushing companies to continually invest.
?
In the Global Market there are well known NBFIs like Morgan Stanley and Wells Fargo on the mass-market side and regional companies like Ed Jones, Stifel Financial and Morgan Keegan to name but a few. Also there are the independent broker dealers, discounters, insurance companies, private banks and trust companies competing for many of the same investors. In India, from an era of concentrated regional operations, low credibility and poor risk management practices NBFIs have come a long way to highly sophisticated operations, pan-India presence and as an alternate choice of financial intermediation. Today, NBFIs are present in the fields of vehicle financing, housing loans, hire purchase, lease and personal loans.
?
?
INDIABULLS FINANCIAL SERVICES LTD.
?
NBFIs' growth had been constrained due to lack of adequate capital. Going forward, we believe capital infusion and leverage thereupon would catapult NBFIs' growth in size and scale. A number of NBFIs have been issuing non-convertible debentures (NCDs) in order to increase liquidity in their balance sheets. Also to address this purpose, especially in the infra financing space, a new category of NBFIs was formed called Infrastructure Financing Companies (IFCs). NBFIs are not required to maintain cash reserve ratio (CRR) and statutory liquid ratio (SLR). Priority sector lending norm of 40% (of total advances) is also not applicable for them.
?
?
Let’s overlay the Porter’s five forces on the financial services industry:i. Barriers To Entry:a. Licensing requirement b. Investment in technology c. Skills required for project finance d. Distribution reach e. Minimum capital requirements ii. Bargaining power of buyers: a. This is high because banks have also forayed into the long-term finance. iii. Bargaining power of suppliers:a. Fund providers could be more demanding because quality of services provided in minimum time matters a lot. iv. Threat of substitutes:a. There is high risk because along with non-banking finance companies there are public sector, private sector and foreign banks as well competing in similar markets. v. Rivalry:-
INDIABULLS FINANCIAL SERVICES LTD.
a. The large mass-market participants compete for market share at the expense of financial performance following and sometimes leap-frogging the leader. b. The niche players, those whose plan is to play for a small niche can do so far more profitably. c. Between the above two industry participants lies the “ditch.” This is the place where the companies who are too big to be a niche player and too small to take on the mass-market find themselves sliding.
2. PEST Analysis:
a. Political Factors: i. Legal Controls on business activities: Rules and regulations are considered the business legal assurances and play an important role of protecting the business and customer’s rights. Government system and procedure towards business activity: The county policy will play a major role for the income of foreigners, as this will have great impact for them to establish local business in the local market sector.
ii.
b. Economic Factors:
i. ii.
Introduction of the threshold limit for TDS on the interest income on unlisted debentures Tax Deduction at Source on Interest- As per Sec 194A of the Act, the Tax Deduction at Source (TDS) @10% is required to be deducted on the interest portion of the installment paid to the NBFI under loan / finance agreements. However, the banking companies, LIC, UTI etc. engaged in banking business are exempted from the purview of this Section. Therefore the NBFIs may also be exempted
INDIABULLS FINANCIAL SERVICES LTD.
iii.
iv.
v.
vi. vii.
viii. ix.
x. xi.
NBFIs have traditionally focused on customer segments which were not served by banks like micro, small and medium enterprises (MSMEs), funding of commercial vehicles including old vehicles, farm equipment viz. tracking, harvesters, etc. loan against shares, funding of plant and machinery; etc. The number of NBFIs has decreased from 13,014 in FY06 to 12,409 in FY11 however the sector has grown by 2.6 times between FY06 and FY11 at a CAGR of 21%. It accounted for 10.8% in terms of outstanding advances and 13% in terms of assets of the banking system inFY06. This share has risen to 13.2% and 13.78% respectively in FY11. In terms of deposits the share of public deposits held by NBFIs as compared to deposit base of banks has decreased from 1.05% in FY06 to 0.22% in FY11. Public deposits held by NBFIs have shown a falling trend, decreasing by approximately 48% in the last 5 years, while owned funds (reserves & surplus and capital deployed) have gone up by195%. The outstanding advances have grown approximately 3 times in the last 5 years to reach Rs.536, 074 crores in FY11. Banks’ exposure to NBFIs has increased from Rs.62,308 crore in FY06 to Rs.183,839 crore in FY11, an increase of approximately 3 times growing at a CAGR of24% during the period FY06-FY11 and a 37% increase over FY10. NBFIs play a supportive role in the economy and also in financial inclusion and therefore need to be encouraged. The Infrastructure Finance NBFIs had an outstanding infrastructure loan book size of Rs.1, 96, 158 crore. Given the projected capital requirement for infrastructure sector in the 12th five-year plan, NBFIs will play a part in supplying capital to the sector. However, proper credit rating, accounting and financial norms have to be ushered in for greater transparency and soundness of the sector as also operating in the NBFI sector.
c. Social Factors:i. Religion and Language: Majority of population in India being Hindunorms shall be decided keeping them in mind however at the same time they should not neglect other communities. Middle Income Group: Awareness among general (middle income group) masses about these financial institutions
ii.
INDIABULLS FINANCIAL SERVICES LTD.
iii.
Urbanization & Demographic Improvements: Increasing urbanization and demographic evolutions will result in 40% of Indian population residing in cities by 2030, up from current rate of 31%. *Source: Ministry of Housing and Urban Poverty Alleviation Report
d. Technological Factors: i. Internet Users: The number of internet users worldwide is expected to touch 2.2 billion by 2013 and India is projected to have the third largest online population during the same time so e-commerce and online financial services have huge scope. Mobile Phones and SMS Service: According to the report released by Telecom Regulatory Authority of India (TRAI), India saw addition of 8 million new mobile subscribers in March 2012 taking the total tally of mobile subscribers in India to 919.17 million. So, promotion of financial services and enlightening general masses about their schemes and promotions via telephony can bring a boost in the sector.
ii.
3. Competitor Analysis
Indiabulls Financial Services Limited (IBFS) is a financial service provider, based in India. Her products portfolio includes commercial loans, vehicle loans, loan against property, consumer loans, home loans and insurance products. It also provides services, such as consumer finance, mortgage and housing finance, and advisory services. The main competitors of the company are:i. ii. iii. iv. v. vi. VLS Finance Ltd. India Infoline Ltd Manappuram General Finance and Leasing Limited. Future Capital Holdings Limited Edelweiss Capital Ltd. Mahindra & Mahindra Financial Services Ltd.
INDIABULLS FINANCIAL SERVICES LTD.
vii. viii.
Karvy Investor Services Limited Reliance Capital Limited
Here we will analyze the pricing, quality, distribution and partnerships of the Edelweiss Financial Services
INTRODUCTION
Edelweiss is one of India's leading Financial Services Groups, with operations that span more than forty different lines of business and subsidiaries. Their operations straddle the entire spectrum of financial services in the wholesale and retail market segments including Asset Management, Capital Markets, Credit, Housing Finance and Insurance services. India’s growth story is driven by a savings rate of about 32%, one of the youngest populations in the world and strong domestic consumption. With a net worth of over INR 28 Bn, Edelweiss is adequately capitalized to exploit the opportunities emerging from this robust economic growth. Edelweiss employs over 2900 professionals across 297 offices and branches spread across 144 cities of India.
4. SWOT Analysis
? Strengths: 1. Large Customer Base 2. Low Cost of Capital 3. Adherence to mandate 4. Commitment to achievement of mandate 5. Protection of the investors 6. Legislation internationally benchmarked 7. Support from Ministry of Finance
INDIABULLS FINANCIAL SERVICES LTD.
?
Weakness: 1. Inflation 2. High risk exposure in investments in real estate 3. Commodities are not traded online
?
Opportunities 1. Opportunities in the growing cities 2. Urban Youth looking for investment options 3. Financial services like banking 4. Market expansion i.e. opening branches at untapped areas 5. ATM facility should be provided for easy withdrawals. 6. The Capital market in the last few years has turned out to be one of the favorable avenues for the retail investors 7. Scope of online trading on BSE.
?
Threats 1. Stringent Economic measures by Government and RBI 2. Entry of foreign finance firms in Indian Market 3. Banks with demat facility jockeying for position. 4. Local brokers capable of charging lower brokerage. 5. Industry competitors vying for the same target segment.
INDIABULLS FINANCIAL SERVICES LTD.
COMPANY ANALYSIS
1. DESCRIPTION:Indiabulls Financial Services Ltd, one of India's leading non-banking financial companies (NBFCs) is leading provider of lending and other financial products including home loans, loans against property, commercial vehicle loans, and commercial credit to prime corporate. Indiabulls Housing Finance has one of the fastest Home Loan delivery systems in India. Easy & convenient online access of Indiabulls’ Home Loan account saves time, efforts & money wasted in visiting offices of home loan providers for every single query or requirement. All the security measures for online account access are taken care of at Indiabulls Housing Finance.
2. DETAILED INFORMATION:Indiabulls Financial Services Limited was incorporated on January 10, 2000 as M/s Orbis InfoTech Private Limited at New Delhi under the Companies Act, 1956 with Registration No. 55 - 103183. The name of Company was changed to M/s. Indiabulls Financial Services Private Limited on March 16, 2001 due to change in the main objects of the Company from InfoTech business to Investment & Financial Services business. It became a Public Limited Company on February 27, 2004 and the name of Company was changed to M/s. Indiabulls Financial Services Limited. And now this company has achieved milestone by voted as The Youngest Company of the year in ET500 Indiabulls is promoted by three engineers from the Indian Institute of Technology (IIT) Delhi. Foreign Institutional Investors (FIIs) and foreign funds hold over 60 percent shareholdings of Indiabulls. Some of the large shareholders of Indiabulls are the largest financial institutions of the world such as Fidelity Funds, Capital International, Goldman Sachs, Merrill Lynch, Lloyd George and Farallon Capital. There are approximately over 40,000 shareholders of the company. Indiabulls Financial Services Ltd is a public company and listed on the National Stock Exchange, Bombay Stock Exchange, Luxembourg Stock Exchange and London Stock Exchange. The market capitalization of Indiabulls Financial Services is approx Rs 7,426 crore, and the consolidated net worth of the company is approx Rs 5,037 crore with an asset book of Rs 27,521 Crore.
INDIABULLS FINANCIAL SERVICES LTD.
Indiabulls Financial Services enjoys AA+ rating and has one of the lowest leverage and highest net worth among the peer group. Indiabulls Financial Services is a retail financial services company providing a diverse array of financial products and services, through its nationwide network of over 180 branches, and services over 3,00,000 clients spread across 110 cities in India. Indiabulls, along with its subsidiary companies, offer consumer loans, brokerage and depository services, personal loans, home loans and other financial products and services to the retail markets
3. Financial performance of the company: ? Indiabulls Financial Services reports fiscal 2011 revenues of Rs. 3846.3 crore, YoY growth of 53%
? ? ? ? ? ? Reports profits of Rs 1006.36 crore, YoY growth of 32.57% Return on Equity (RoE) has grown to 20.35%. The company intends to further improve RoE by maintaining an overall business growth of 30% The company continues to witness improving operational efficiency, with the cost to income ratio further declining to below 19% The total provision pool, including floating and standard asset provisions, stood at Rs.329.83 Cr as on March31, 2012, compared to Rs.219.74Cr on March31, 2011 Assets have grown at a quarterly average of approx Rs.2,000 Cr over the course of the last 10 quarters Home loans, which form the majority of incremental disbursals, are disbursed at an average ticket size of Rs.23 lacs; average LTV of 64% at origination, for an average term of about 14 years. In keeping with its stated strategy, the company continues to maintain healthy levels of liquidity with cash, cash equivalents and investments in liquid debt instruments adding up to Rs.5,975.62 Cr at the end of FY11-12 Funds raised through bonds has grown to Rs.6,167 Cr in Mar2012,up from Rs.3,903 Cr in Mar2011
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4. SWOT Analysis:-
INDIABULLS FINANCIAL SERVICES LTD.
?
Strengths:-
1. They provide innovative range of financial products 2. Most competitive brokerage and DP charges 3. Exposure updating tie-ups with leading banks 4. Well diverse Investment portfolio 5. Has over 300000 clients 6. Online trading platform. 7. Diverse Branch Network provides ample opportunities to penetrate deep into the existing & untapped market. 8. Indiabulls offers its clients a pool of financial services and products: 9. No annual maintenance charges. 10. No custodial charge. 11. It does not keep any condition as to collect minimum amount of brokerage from its clients 12. Most competitive BROKERAGE and DP charges (on delivery0.5% and on intraday 0.1%)•Equity analysis report to support the investment decision of its clients• Trading via branch network, telephones and internet account i.e. both online and offline 13. Induction of new employees through an extensive computer based training module. 14. Real time online transfer fund and exposure updating facility with HDFC, CITIBANK, ICICI ? Weakness:1. High risk exposure in investments in real estate 2. It should have its own mutual funds as Indiabulls is providing advises in mutual fund. 3. It should provide tips via SMS.
INDIABULLS FINANCIAL SERVICES LTD.
4. There should be a separate set of staff working in fields and trading on behalf of their clients: 5. Position to answer the questions of their clients relating to the current market position as they are on fields. 6. Commodities are not traded online. 7. It does not provide with the indices of major world markets, ADR prices of Indian scripts. 8. Unlike some of its competitors like ICICI and Kotak, Indiabulls does not provide a complete catalogue of financial services (e.g. Banking facility) 9. Due to the continuous need to meet the targets, some of the Relationship managers crack under pressure and thus leave the organization. ? Opportunities:1. Opportunities in the growing cities 2. Urban Youth looking for investment options 3. Financial services like banking 4. Market expansion i.e. opening branches at untapped areas 5. Indiabulls is registered with Luxembourg stock exchange and so can target other stock exchanges. 6. ATM facility should be provided for easy withdrawals. 7. The Capital market in the last few years has turned out to be one of the favorable avenues for the retail investors 8. Scope of online trading on BSE. ? Threats: 1. Stringent Economic measures by Government and RBI 2. Entry of foreign finance firms in Indian Market
INDIABULLS FINANCIAL SERVICES LTD.
3. Companies like Share khan, ICICI Direct, Kotak and Private Brokers are major threats to Indiabulls. 4. Banks with demat facility jockeying for position. 5. Local brokers capable of charging lower brokerage. 6. Industry competitors vying for the same target segment.
Various Strategies and mergers:Merger Of IBFSL & IHFL There was a restructure of business as Indiabulls Financial Services Limited (IBFSL) was reverse merged with its wholly owned subsidiary, Indiabulls Housing Finance Limited (IHFL), a Housing Finance Company (HFC) registered with NHB. Majority of the incremental business of IBFSL relates to housing finance and all other companies with similar asset profile and business are already licensed as HFCs. Amalgamation with IHFL consolidates the capital available to the merged HFC entity, enabling it to steadily grow its mortgage loans business ArcelorMittal, Indiabulls to form JV for coal, iron ore mining The joint venture will look at all mining opportunities that will be offered in India, while for captive purposes, coal and iron ore are the two minerals company will be interested in. Mining operations will be carried out through special purpose vehicles. The move to form a joint mining venture is the latest by Arcelor Mittal to establish a presence in the Indian steel market, considered the world’s second largest after China. Arcelor Mittal, which alone accounts for 8% of global steel production, had announced plans to set up steel projects in Jharkhand in 2005 and Orissa in 2006. However, not much progress has been made, owing to delay in iron ore linkages or in acquiring land. Acquiring Prime land at strategic locations: They continue to look for assets with a discerning eye-land parcels whose development potential would yield massive returns in the long run. Total land acquired in FY 11 was worth Rs. 2,340 crores for 192.75 acres, as against Rs. 133.38 crores for 76.63 acres in
INDIABULLS FINANCIAL SERVICES LTD.
FY 10. This includes the most prized and coveted acquisition of Bharat and Podar Mills (bought in NTC auction) in the heart of Mumbai. This super prime property is one of the last few remaining land parcels in the central hub of Worli, and is a strategic fit with their focus on city-centric assets in the commercial metropolis.
doc_814905346.docx
This is a documentation is about company analysis of Indiabulls financial sevices
Industry Analysis
1. Industry trends:
A non-bank financial institution (NBFI) is a financial institution that does not have a full banking license or is not supervised by a national or international banking regulatory agency. NBFIs facilitate bank-related financial services, such as investment, risk pooling, contractual savings, and market brokering. As the economic recovery takes a fragile hold, several powerful market trends are significantly altering the economics of the financial services industry. There are many forces at play—margin pressure, regulatory changes, globalization and complexity, and fast-moving technology innovation. Tackling these trends would be a challenge. Margins continue to be under pressure as asset values decline, net inflows for assets under management remain low, and investors continue to press for lower expense ratios. On the regulatory front, the push in the U.S. and Europe to increase transparency and risk management is driving up the costs of compliance. Also increased globalization and complexity mean that financial institutions need to offer a wider array of investment strategies and increasingly complex products (for example, OTC derivatives) to a global client base. Finally, technology innovation such as cloud computing and the need for on-demand data is speeding upgrade cycles and pushing companies to continually invest.
?
In the Global Market there are well known NBFIs like Morgan Stanley and Wells Fargo on the mass-market side and regional companies like Ed Jones, Stifel Financial and Morgan Keegan to name but a few. Also there are the independent broker dealers, discounters, insurance companies, private banks and trust companies competing for many of the same investors. In India, from an era of concentrated regional operations, low credibility and poor risk management practices NBFIs have come a long way to highly sophisticated operations, pan-India presence and as an alternate choice of financial intermediation. Today, NBFIs are present in the fields of vehicle financing, housing loans, hire purchase, lease and personal loans.
?
?
INDIABULLS FINANCIAL SERVICES LTD.
?
NBFIs' growth had been constrained due to lack of adequate capital. Going forward, we believe capital infusion and leverage thereupon would catapult NBFIs' growth in size and scale. A number of NBFIs have been issuing non-convertible debentures (NCDs) in order to increase liquidity in their balance sheets. Also to address this purpose, especially in the infra financing space, a new category of NBFIs was formed called Infrastructure Financing Companies (IFCs). NBFIs are not required to maintain cash reserve ratio (CRR) and statutory liquid ratio (SLR). Priority sector lending norm of 40% (of total advances) is also not applicable for them.
?
?
Let’s overlay the Porter’s five forces on the financial services industry:i. Barriers To Entry:a. Licensing requirement b. Investment in technology c. Skills required for project finance d. Distribution reach e. Minimum capital requirements ii. Bargaining power of buyers: a. This is high because banks have also forayed into the long-term finance. iii. Bargaining power of suppliers:a. Fund providers could be more demanding because quality of services provided in minimum time matters a lot. iv. Threat of substitutes:a. There is high risk because along with non-banking finance companies there are public sector, private sector and foreign banks as well competing in similar markets. v. Rivalry:-
INDIABULLS FINANCIAL SERVICES LTD.
a. The large mass-market participants compete for market share at the expense of financial performance following and sometimes leap-frogging the leader. b. The niche players, those whose plan is to play for a small niche can do so far more profitably. c. Between the above two industry participants lies the “ditch.” This is the place where the companies who are too big to be a niche player and too small to take on the mass-market find themselves sliding.
2. PEST Analysis:
a. Political Factors: i. Legal Controls on business activities: Rules and regulations are considered the business legal assurances and play an important role of protecting the business and customer’s rights. Government system and procedure towards business activity: The county policy will play a major role for the income of foreigners, as this will have great impact for them to establish local business in the local market sector.
ii.
b. Economic Factors:
i. ii.
Introduction of the threshold limit for TDS on the interest income on unlisted debentures Tax Deduction at Source on Interest- As per Sec 194A of the Act, the Tax Deduction at Source (TDS) @10% is required to be deducted on the interest portion of the installment paid to the NBFI under loan / finance agreements. However, the banking companies, LIC, UTI etc. engaged in banking business are exempted from the purview of this Section. Therefore the NBFIs may also be exempted
INDIABULLS FINANCIAL SERVICES LTD.
iii.
iv.
v.
vi. vii.
viii. ix.
x. xi.
NBFIs have traditionally focused on customer segments which were not served by banks like micro, small and medium enterprises (MSMEs), funding of commercial vehicles including old vehicles, farm equipment viz. tracking, harvesters, etc. loan against shares, funding of plant and machinery; etc. The number of NBFIs has decreased from 13,014 in FY06 to 12,409 in FY11 however the sector has grown by 2.6 times between FY06 and FY11 at a CAGR of 21%. It accounted for 10.8% in terms of outstanding advances and 13% in terms of assets of the banking system inFY06. This share has risen to 13.2% and 13.78% respectively in FY11. In terms of deposits the share of public deposits held by NBFIs as compared to deposit base of banks has decreased from 1.05% in FY06 to 0.22% in FY11. Public deposits held by NBFIs have shown a falling trend, decreasing by approximately 48% in the last 5 years, while owned funds (reserves & surplus and capital deployed) have gone up by195%. The outstanding advances have grown approximately 3 times in the last 5 years to reach Rs.536, 074 crores in FY11. Banks’ exposure to NBFIs has increased from Rs.62,308 crore in FY06 to Rs.183,839 crore in FY11, an increase of approximately 3 times growing at a CAGR of24% during the period FY06-FY11 and a 37% increase over FY10. NBFIs play a supportive role in the economy and also in financial inclusion and therefore need to be encouraged. The Infrastructure Finance NBFIs had an outstanding infrastructure loan book size of Rs.1, 96, 158 crore. Given the projected capital requirement for infrastructure sector in the 12th five-year plan, NBFIs will play a part in supplying capital to the sector. However, proper credit rating, accounting and financial norms have to be ushered in for greater transparency and soundness of the sector as also operating in the NBFI sector.
c. Social Factors:i. Religion and Language: Majority of population in India being Hindunorms shall be decided keeping them in mind however at the same time they should not neglect other communities. Middle Income Group: Awareness among general (middle income group) masses about these financial institutions
ii.
INDIABULLS FINANCIAL SERVICES LTD.
iii.
Urbanization & Demographic Improvements: Increasing urbanization and demographic evolutions will result in 40% of Indian population residing in cities by 2030, up from current rate of 31%. *Source: Ministry of Housing and Urban Poverty Alleviation Report
d. Technological Factors: i. Internet Users: The number of internet users worldwide is expected to touch 2.2 billion by 2013 and India is projected to have the third largest online population during the same time so e-commerce and online financial services have huge scope. Mobile Phones and SMS Service: According to the report released by Telecom Regulatory Authority of India (TRAI), India saw addition of 8 million new mobile subscribers in March 2012 taking the total tally of mobile subscribers in India to 919.17 million. So, promotion of financial services and enlightening general masses about their schemes and promotions via telephony can bring a boost in the sector.
ii.
3. Competitor Analysis
Indiabulls Financial Services Limited (IBFS) is a financial service provider, based in India. Her products portfolio includes commercial loans, vehicle loans, loan against property, consumer loans, home loans and insurance products. It also provides services, such as consumer finance, mortgage and housing finance, and advisory services. The main competitors of the company are:i. ii. iii. iv. v. vi. VLS Finance Ltd. India Infoline Ltd Manappuram General Finance and Leasing Limited. Future Capital Holdings Limited Edelweiss Capital Ltd. Mahindra & Mahindra Financial Services Ltd.
INDIABULLS FINANCIAL SERVICES LTD.
vii. viii.
Karvy Investor Services Limited Reliance Capital Limited
Here we will analyze the pricing, quality, distribution and partnerships of the Edelweiss Financial Services
INTRODUCTION
Edelweiss is one of India's leading Financial Services Groups, with operations that span more than forty different lines of business and subsidiaries. Their operations straddle the entire spectrum of financial services in the wholesale and retail market segments including Asset Management, Capital Markets, Credit, Housing Finance and Insurance services. India’s growth story is driven by a savings rate of about 32%, one of the youngest populations in the world and strong domestic consumption. With a net worth of over INR 28 Bn, Edelweiss is adequately capitalized to exploit the opportunities emerging from this robust economic growth. Edelweiss employs over 2900 professionals across 297 offices and branches spread across 144 cities of India.
4. SWOT Analysis
? Strengths: 1. Large Customer Base 2. Low Cost of Capital 3. Adherence to mandate 4. Commitment to achievement of mandate 5. Protection of the investors 6. Legislation internationally benchmarked 7. Support from Ministry of Finance
INDIABULLS FINANCIAL SERVICES LTD.
?
Weakness: 1. Inflation 2. High risk exposure in investments in real estate 3. Commodities are not traded online
?
Opportunities 1. Opportunities in the growing cities 2. Urban Youth looking for investment options 3. Financial services like banking 4. Market expansion i.e. opening branches at untapped areas 5. ATM facility should be provided for easy withdrawals. 6. The Capital market in the last few years has turned out to be one of the favorable avenues for the retail investors 7. Scope of online trading on BSE.
?
Threats 1. Stringent Economic measures by Government and RBI 2. Entry of foreign finance firms in Indian Market 3. Banks with demat facility jockeying for position. 4. Local brokers capable of charging lower brokerage. 5. Industry competitors vying for the same target segment.
INDIABULLS FINANCIAL SERVICES LTD.
COMPANY ANALYSIS
1. DESCRIPTION:Indiabulls Financial Services Ltd, one of India's leading non-banking financial companies (NBFCs) is leading provider of lending and other financial products including home loans, loans against property, commercial vehicle loans, and commercial credit to prime corporate. Indiabulls Housing Finance has one of the fastest Home Loan delivery systems in India. Easy & convenient online access of Indiabulls’ Home Loan account saves time, efforts & money wasted in visiting offices of home loan providers for every single query or requirement. All the security measures for online account access are taken care of at Indiabulls Housing Finance.
2. DETAILED INFORMATION:Indiabulls Financial Services Limited was incorporated on January 10, 2000 as M/s Orbis InfoTech Private Limited at New Delhi under the Companies Act, 1956 with Registration No. 55 - 103183. The name of Company was changed to M/s. Indiabulls Financial Services Private Limited on March 16, 2001 due to change in the main objects of the Company from InfoTech business to Investment & Financial Services business. It became a Public Limited Company on February 27, 2004 and the name of Company was changed to M/s. Indiabulls Financial Services Limited. And now this company has achieved milestone by voted as The Youngest Company of the year in ET500 Indiabulls is promoted by three engineers from the Indian Institute of Technology (IIT) Delhi. Foreign Institutional Investors (FIIs) and foreign funds hold over 60 percent shareholdings of Indiabulls. Some of the large shareholders of Indiabulls are the largest financial institutions of the world such as Fidelity Funds, Capital International, Goldman Sachs, Merrill Lynch, Lloyd George and Farallon Capital. There are approximately over 40,000 shareholders of the company. Indiabulls Financial Services Ltd is a public company and listed on the National Stock Exchange, Bombay Stock Exchange, Luxembourg Stock Exchange and London Stock Exchange. The market capitalization of Indiabulls Financial Services is approx Rs 7,426 crore, and the consolidated net worth of the company is approx Rs 5,037 crore with an asset book of Rs 27,521 Crore.
INDIABULLS FINANCIAL SERVICES LTD.
Indiabulls Financial Services enjoys AA+ rating and has one of the lowest leverage and highest net worth among the peer group. Indiabulls Financial Services is a retail financial services company providing a diverse array of financial products and services, through its nationwide network of over 180 branches, and services over 3,00,000 clients spread across 110 cities in India. Indiabulls, along with its subsidiary companies, offer consumer loans, brokerage and depository services, personal loans, home loans and other financial products and services to the retail markets
3. Financial performance of the company: ? Indiabulls Financial Services reports fiscal 2011 revenues of Rs. 3846.3 crore, YoY growth of 53%
? ? ? ? ? ? Reports profits of Rs 1006.36 crore, YoY growth of 32.57% Return on Equity (RoE) has grown to 20.35%. The company intends to further improve RoE by maintaining an overall business growth of 30% The company continues to witness improving operational efficiency, with the cost to income ratio further declining to below 19% The total provision pool, including floating and standard asset provisions, stood at Rs.329.83 Cr as on March31, 2012, compared to Rs.219.74Cr on March31, 2011 Assets have grown at a quarterly average of approx Rs.2,000 Cr over the course of the last 10 quarters Home loans, which form the majority of incremental disbursals, are disbursed at an average ticket size of Rs.23 lacs; average LTV of 64% at origination, for an average term of about 14 years. In keeping with its stated strategy, the company continues to maintain healthy levels of liquidity with cash, cash equivalents and investments in liquid debt instruments adding up to Rs.5,975.62 Cr at the end of FY11-12 Funds raised through bonds has grown to Rs.6,167 Cr in Mar2012,up from Rs.3,903 Cr in Mar2011
?
?
4. SWOT Analysis:-
INDIABULLS FINANCIAL SERVICES LTD.
?
Strengths:-
1. They provide innovative range of financial products 2. Most competitive brokerage and DP charges 3. Exposure updating tie-ups with leading banks 4. Well diverse Investment portfolio 5. Has over 300000 clients 6. Online trading platform. 7. Diverse Branch Network provides ample opportunities to penetrate deep into the existing & untapped market. 8. Indiabulls offers its clients a pool of financial services and products: 9. No annual maintenance charges. 10. No custodial charge. 11. It does not keep any condition as to collect minimum amount of brokerage from its clients 12. Most competitive BROKERAGE and DP charges (on delivery0.5% and on intraday 0.1%)•Equity analysis report to support the investment decision of its clients• Trading via branch network, telephones and internet account i.e. both online and offline 13. Induction of new employees through an extensive computer based training module. 14. Real time online transfer fund and exposure updating facility with HDFC, CITIBANK, ICICI ? Weakness:1. High risk exposure in investments in real estate 2. It should have its own mutual funds as Indiabulls is providing advises in mutual fund. 3. It should provide tips via SMS.
INDIABULLS FINANCIAL SERVICES LTD.
4. There should be a separate set of staff working in fields and trading on behalf of their clients: 5. Position to answer the questions of their clients relating to the current market position as they are on fields. 6. Commodities are not traded online. 7. It does not provide with the indices of major world markets, ADR prices of Indian scripts. 8. Unlike some of its competitors like ICICI and Kotak, Indiabulls does not provide a complete catalogue of financial services (e.g. Banking facility) 9. Due to the continuous need to meet the targets, some of the Relationship managers crack under pressure and thus leave the organization. ? Opportunities:1. Opportunities in the growing cities 2. Urban Youth looking for investment options 3. Financial services like banking 4. Market expansion i.e. opening branches at untapped areas 5. Indiabulls is registered with Luxembourg stock exchange and so can target other stock exchanges. 6. ATM facility should be provided for easy withdrawals. 7. The Capital market in the last few years has turned out to be one of the favorable avenues for the retail investors 8. Scope of online trading on BSE. ? Threats: 1. Stringent Economic measures by Government and RBI 2. Entry of foreign finance firms in Indian Market
INDIABULLS FINANCIAL SERVICES LTD.
3. Companies like Share khan, ICICI Direct, Kotak and Private Brokers are major threats to Indiabulls. 4. Banks with demat facility jockeying for position. 5. Local brokers capable of charging lower brokerage. 6. Industry competitors vying for the same target segment.
Various Strategies and mergers:Merger Of IBFSL & IHFL There was a restructure of business as Indiabulls Financial Services Limited (IBFSL) was reverse merged with its wholly owned subsidiary, Indiabulls Housing Finance Limited (IHFL), a Housing Finance Company (HFC) registered with NHB. Majority of the incremental business of IBFSL relates to housing finance and all other companies with similar asset profile and business are already licensed as HFCs. Amalgamation with IHFL consolidates the capital available to the merged HFC entity, enabling it to steadily grow its mortgage loans business ArcelorMittal, Indiabulls to form JV for coal, iron ore mining The joint venture will look at all mining opportunities that will be offered in India, while for captive purposes, coal and iron ore are the two minerals company will be interested in. Mining operations will be carried out through special purpose vehicles. The move to form a joint mining venture is the latest by Arcelor Mittal to establish a presence in the Indian steel market, considered the world’s second largest after China. Arcelor Mittal, which alone accounts for 8% of global steel production, had announced plans to set up steel projects in Jharkhand in 2005 and Orissa in 2006. However, not much progress has been made, owing to delay in iron ore linkages or in acquiring land. Acquiring Prime land at strategic locations: They continue to look for assets with a discerning eye-land parcels whose development potential would yield massive returns in the long run. Total land acquired in FY 11 was worth Rs. 2,340 crores for 192.75 acres, as against Rs. 133.38 crores for 76.63 acres in
INDIABULLS FINANCIAL SERVICES LTD.
FY 10. This includes the most prized and coveted acquisition of Bharat and Podar Mills (bought in NTC auction) in the heart of Mumbai. This super prime property is one of the last few remaining land parcels in the central hub of Worli, and is a strategic fit with their focus on city-centric assets in the commercial metropolis.
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