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Motilal Oswal Report
IIFL Wealth Management Ltd.'s Q1 FY21 profit after tax grew 33% YoY to Rs 819m (63% beat), driven by 8%/7% beat on core revenues/opex.
Stronger-than-expected top line was largely due to higher transaction based revenue (Rs 710 million versus estimate Rs 500 million).
Operating expenses were down 20% QoQ (up 2% YoY) to Rs 1.3 billion (7% beat), driven largely by lower employee cost. As the company pruned salaries, fixed cost declined approximately 10% QoQ.
In addition, employee stock ownership plan cost more than halved QoQ to Rs 140 million. Management is targeting to reduce the cost to income ratio to 50% over the next 18 months (approximately 64% in Q1 FY21).
During the quarter, IIFL Wealth acquired Larsen & Toubro Wealth management business for Rs 2.96 billion, which led to goodwill accretion of Rs 2.44 billion.
The business contributed 5.4%/7.2% /4.5% of the overall/ annual recurring revenue /transaction based revenue asset under management in Q1 FY21.
Total goodwill on the balance sheet now stands at Rs 5.2 billion (17% of net worth).
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