Investment positives
�� Buoyant Indian equity market conditions to drive topline growth : Indian equity markets remain buoyant, with the current daily average turnover in FY08 being approximately Rs 702bn. Ahead, we expect growth rates to be modest, even while remaining strong though with cyclical downsides.
�� Equity broking revenues to be driven by rising contribution from the
institutional segment :The India Infoline management went the inorganic way and inducted a team to initiate institutional broking. The new team brings to the table, besides expertise in research, strong client relationships in the institutional segment. We estimate broking revenues to grow at a CAGR of 58% over FY07-10,driven by the increased contribution from the institutional segment.
�� Strong distribution network and rapidly growing customer base to drive growth in distribution income: India Infoline now has 596 branches in 345 cities, compared to only 177 branches in FY06. The client base has grown from 75,000 on March 31, 2006 to over 500,000 on September 30, 2007.
�� “Feet-on-Street” model driving growth in revenue from insurance commissions: With the rapid increase in client additions and branch network, we expect the company to generate a WAPI of ~Rs 700m and insurance commissions of Rs 1,311m in FY08. It is expected to receive its insurance broking license by the current fiscal year-end.
�� Recent capital infusion to drive growth in margin finance income, consumer finance has potential : In its fully-owned subsidiary, India Infoline Investment Services, the parent company sold its 22.5% stake to the Singapore-based Orient Global at $76.7m. We see the recent capital infusion benefiting the margin finance and consumer finance business. We estimate the margin finance book to grow by
95% in FY08 and 51% in FY09.

Concerns
�� Revenues and profitability are highly dependent on equity market activity
�� Margin finance losses can be large during sharp corrections in equity markets