IIFL CAPITAL SERVICES LIMITED (NSE: IIFLCAPS) Q1 2026 Earnings Call dated Jul. 29, 2025
Corporate Participants:
Unidentified Speaker
R. Venkataraman — Managing Director
Analysts:
Unidentified Participant
Prayesh Jain — Analyst
Chetan Gindodia — Analyst
Keshav — Analyst
Aditya Bhatia — Analyst
Presentation:
operator
Good day and welcome to IIFL Capital Services Limited Q1FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star than zero on your touchstone phone. Please note that this call is being recorded with this. I now hand the conference over to Mr. R. Venkataraman, managing Director, IIFL Capital Services. Thank you and over to you sir.
R. Venkataraman — Managing Director
Thank you and good afternoon everyone. Welcome to the Q1FY26 analyst call of IFL Capital. I am accompanied with Ronald Gandhi who is Our India’s macroeconomic outlook remains strong which is supported by easing inflation which has resulted in a lower interest rate scenario, healthy monsoon and benign oil prices. Our economy is showing signs of improving consumption once the interest rate benefits start trickling down. As you might be aware, we have two broad segments, Institutional equities and Investment Banking and the legacy retail broking segment. We are trying and transforming our retail broking segment into a full wealth management and financial planning practice.
We believe that we are well placed to succeed in this transformation given the fact that we have a suitable network. We have a pan India distribution reach, a critical mass of customers, technology as well as research credentials. Coming to the first quarter results. Revenue for the quarter consolidated was 680 crores up 19% quarter on quarter 6% up 6% year on year. Let me give you the color of the quarter on quarter analysis. Institutional investment banking revenue virtually doubled from previous quarter which is Q4FY25 versus first quarter of FY26. Regional brokerage also increased 15%. Distribution income which is financial product distribution income has decreased 24% because of the insurance effect which sees a spike in the last quarter of year because of March effect.
Other income has increased 73% 63 crores in this quarter versus 36 crores in the previous quarter. That is mainly due to mark to market investments especially the BSE shares which we have. Employee cost increase from 163 crores to 176 crores in the first quarter FY26 mainly because of increase in headcount and some provisions for variable pay. Depreciation has increased marginally. Fees and commission income on extent side has increased 24% because of payouts. Admin expense has increased marginally by 7% to 80 crores for 86 crores and as a result PAT has increased 37% from 128 crores in the previous quarter to 176 crores in this quarter.
Coming to year on year analysis we have seen a virtual flat impact on institutional and banking income which is virtually flat from Q1 of FY25 to Q1 on FY26 the retail brokerage has declined 28% and that is mainly because of regulatory changes that came into effect on 12-20-20 and that is primarily to do with reduction in the number of expiry days. Distribution income SPD distribution income has increased 37% to 145 crores in this quarter basically because of increased focus on asset gathering. Other income has increased dramatically from virtually 4 crores to 63 crores again because of mark to market gains in investment especially BSE shares.
Employee cost has increased from increased 36% from 130 crores to 170 crores basically due to increase in headcount and also because of wealth build up. As you know that we have started building out a wealth factor and have recruited wealth RNS depreciation has increased 40% from 12 crores to 16 crores because of increase in investments in technology as an office fees and Commission income has increased 5% from 128 crores to 134 crores. Admin expenses flat virtually in the same 8386 crores crore range and as a result PAT has fallen 4% from 182 crores in first quarter to 176 crores in the current quarter.
Some housekeeping numbers average Daily turnover was 2.23,232 crores which was broken down into 2.20,263 crores in derivative and cash was 2.96crores. Sorry 2,968 crores in this quarter which was in the previous Q4 FY25 was 1.92,871 crores which was broken into 1.90,336 crores in derivative and cash was 2535 crores and if you remember the first quarter of FY25 which was a bumper quarter which was 3,22,782 crores broken into derivatives of 3,19,455 crores and cash of 3327 crores which was down almost 30%. And as I mentioned earlier because of changes in this regulatory norms because of fall and decline in the number of expiry days we have Consequently I think people ask about market share on a console Full market share basis we are virtually.
Sorry, one second. So on a consolidated basis overall market share we have taken the full exchange denominator. We are at an F and O market share of 0.62% which is broadly in the same range. And for cash market share it’s 2.57% which was in the previous quarter, 2.51% and again that is broadly hovering around the same range. So with this I’ve come to the end of my comments and we are open to answer any questions that you may have. Thank you so much.
Questions and Answers:
operator
Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the Touchstone telephone. If you wish to remove yourself from the question queue you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. The first question comes from the line of prayers Jain from Motilal Oswal. Please go ahead.
Prayesh Jain
Yeah, Good afternoon sir.
R. Venkataraman
How are you all well, how are you?
Prayesh Jain
I’m good sir. So this one is approach towards wealth management. Right. So you know firstly can you as to how many RMs we have added and whether this is the quality of RMs would be like the ultra HNI RMs which would have you know, average salaries of 50 lakhs and above or what are the kind of RMs that we’ve hired in the portable expansion business. Okay.
R. Venkataraman
As I mentioned earlier also we have broadly added about 50 RMS and they are a mix of both HNI, ultra HNI as well as marked upfront RMS. Broadly speaking the salary range will be the number which you have set and we have a higher proportion of hmi, ultra hmi but the entire buildup is happening as we speak.
Prayesh Jain
Okay. And sir, as this kind of scales up, would you segment your customers into two different buckets and you know, the wealth management would be reported separately with respect to clients, AUM base, everything. How would the business shape up from here on?
R. Venkataraman
See as you rightly pointed out and you’re rightly articulating, we have to segment our customers because we have a large base of customers with less than 1 crore network and the segment which you’re targeting will be say maybe in the 5 to 25, greater than 25 crores. So we have to differentiate. But as we speak the business is in build out phase and as business reaches a critical mass and we will be inclined to report and whatever feedback people like you who track markets closely, give, we will listen and report accordingly.
Prayesh Jain
Sure. And so generally to scale up wealth management practices, you need people, you need products and you need processes. People you are hiring. What are the kind of products that we are getting into? Are we getting into manufacturing of PMS, AIFs or in terms of processes, how would be the approach? Is that a digital approach or what kind of approach we will have in terms of processes?
R. Venkataraman
See, that’s a very valid point you have made because it’s a combination of all three products, process people. And so at this point in time, the people part of it is being built on, on the process part of it. Obviously, if you know, we have been doing broking and distribution for a very long time. So we believe that we have the necessary processes and technology in place. But having said that, we also recruited specialists, specialists for wealth because the entire business is more distribution and less broking. And so we have invested in the necessary software as well as people for support for the operations part of IT and coming to products.
As of now, we are depending a lot on our external manufacturers because the bulk of the new asset which you have gathered has come on the mutual fund side and the we are distributing. But having said that, we are also trying to build our own manufacturing practice. And so we are coming. We are, if you remember, we have a small AIF and PMS business and which we have recruited people to scale it up. So we will be manufacturing also. But having said that, we believe that manufacturing is one of the products we have and as a house we are more open for an open architecture model.
Prayesh Jain
Okay, enter. My last question would be on your cost to income. You know, how should we see your cost to income at least for, for this year and possibly as you build out wealth and your, you know, the basic teams of, of investments on AIFs and PMS. Should we think that the cost to income will be elevated this year and then only, you know, probably from next year onwards some benefits should start trickling down. How should we think about cost to income? Yes.
R. Venkataraman
So if you look at our business, we have two broad segments. One is institutional equities and investment banking and the other is the legacy broking which we are transferring to wealth, including the build out of wealth teams. So if you look at the new the business which we call as for the transformation of the business which was erstwhile retail, so we will see an elevated cost to income ratio for sure. And I’ll just give you some broad numbers in the sense that so basically we will as we speak, I think the broad cost to income ratio for the retail or the non institutional side will be in the range of 75%.
And I think this year it will be elevated and we hope to see benefits of scale quickening in next year. So this year we will be seeing elevated numbers.
Prayesh Jain
All right sir, wish you all the best. I’ll come back in the queue. Thanks.
R. Venkataraman
Thank you so much.
operator
Thank you. The next question comes from the line of Chetan from Mahindra mutual fund. Please go ahead.
Chetan Gindodia
Wanted to understand the revenue breakup source. We have 617crores of revenue this quarter out of which are retail, institutional booking and the financial product distribution is roughly 483 crores. So this other segment that remains is 143 crore, 134 crores I think roughly. So what all is included in this and I think this segment has declined for us on a Y basis. So can you explain that because if I see your restaurant segments are doing well but, but still revenue trajectory compared to the first half of last year is a decline. So if you can please explain this.
R. Venkataraman
I think there’s a big component of interest income which is broadly about 100 crores. And that has been the same because previous year quarter also it was in the same ballpark number. I don’t have the exact numbers in front of me but they were in the 100 crore range. Correct. 100 crore range. Interest income is there.
Chetan Gindodia
Okay. Okay. And secondly this, the wealth management business that we are building out. So what sort of say revenue contribution has started coming in from specifically this new wealth business that we are building in and what sort of costs are associated directly with this? So if you can quantify both the revenue and the cost on that.
R. Venkataraman
So I’ll give you just broad numbers. So, so revenues have started coming in. So if you see. I’ll give you some broad estimates because last year we had a revenue of roughly about 40 crores and cost was about 70 crores. So we had a hit of about 30 crores. And this year we are roughly in the revenue of the. This quarter we have made revenues of about 8 crores. And the costly data I don’t have right now because we look at this on a full year basis.
Chetan Gindodia
Okay, so you said 40 and 74. That is for the previous quarter.
R. Venkataraman
Yeah, yeah.
Chetan Gindodia
Thank you. Thank you.
operator
Thank you. The next question comes from the line of Kesha from Bite Mine Investment. Please go ahead.
Keshav
Yeah. So my first question is how many new RNs you have added this quarter in wealth management and what is the strategy of building the wealth management going forward. And my second question is could you please provide the breakup of investment banking revenue and institutional equities revenue.
R. Venkataraman
See basically as you know this quarter we have, I don’t have quarter and quarter addition of exact addition of the people but we are broadly at about 50 hours as we speak and we hope to increase this and if not double then definitely see a 50 to 60% increase in the number of RMS in this space for the full year. And coming to institutional one second. Institutional. See we have roughly about 200 crores of investment banking and institutional equities income and the rough numbers will be about 150 and 50. The 150 brokerage and 150 is banking.
operator
Thank you. Thank you. The next question comes from the line of Aditya Bhatia from Electrum Capital. Please go ahead.
Aditya Bhatia
Yeah, hi, thank you for the opportunity. So number one is how should we see employee cost going up for the current year? And can you please guide for how many more RMS that you’re planning to add for the current year?
R. Venkataraman
See basically we are looking to see as of now we have about 50. So the 50 can go up to any number between 70500 in the full year. So I don’t have an exact number on that and I don’t want to talk about precisely employee cost but it’s better to look at the cost to income ratio. So the cost to income ratio on a consolidated non institutional business will be in the range of 95%. Sure there might be some elevation if. The manpower relations is higher but I think that’s a broad range.
Aditya Bhatia
Okay, and do we have any internal targets for how the distribution AUM is going? So we crossed 357 as of this quarter, let’s say fi, you know, 27, 28.
R. Venkataraman
Yeah, so we have actually I have a number but I unfortunately I’m not, I can’t make any forward looking statement but that is one segment which is, which is I think a focus area. So we are roughly at about 35,007. 35,700 crores. And that is, that is the number which are targeting the group.
Aditya Bhatia
Sure. And can you talk about how your deal pipeline is shaping up for Q2 and for the rest of the year?
R. Venkataraman
Yeah, the investment banking pipeline is quite strong. And if you remember first quarter of this year was this Q4, 25 was a lackluster quarter. So now when the market revived it picked up. So it’s very, I can’t maybe given the current volatility deal pipeline. But again this has not slowed down for the full year. I’m quite optimistic about our deal pipeline and closure.
Aditya Bhatia
Sure. Okay. And finally, can you speak a little on your insurance business?
R. Venkataraman
Yes. I’ll just give you some number. So if you remember, if you see dm, we do both life and non life. And total premium collected for this first year for Q1 was about 10 crores, which was for the previous quarter was 23 crores and first quarter of FY25 was 14 crores. So there has been some dip in this. And for general insurance was also in the roughly range of 30 crores. Apart from these two insurance, we also have investment in Livelong, which is like a wellness or a wellness and affiliate business. And that business is also doing well.
I don’t have an exact figure right in front of me. So these are the three components of an insurance business.
Aditya Bhatia
Sure. And in your next presentations, would you be more open to do a more segmental split of these of the revenue mix, you know, especially when it comes to ieib?
R. Venkataraman
No, see, ieib, the numbers we have given, so they are rough. So we have been disclosing IEIB numbers. So I’ll do one in prioritization. I made some issues of discord. Maybe I’ll take feedback from all of you and then decide what to. So only point is that our retail business is going through a transformation. So once it reaches scale, then maybe we can show some meaningful numbers.
Aditya Bhatia
Okay. And is there any guidance for the rest of the year for FY26?
R. Venkataraman
No, unfortunately we have not given any guidance. I’m sorry.
Aditya Bhatia
Okay. All right, that’d be all. Thank you.
R. Venkataraman
Thank you so much.
operator
Thank you. A reminder to all participants, you may press Star one to ask a question.
R. Venkataraman
So actually, thank you so much for giving us a patient hearing. And please reach out to us if you have any other questions or if you want any other data. And we will be. We look forward to interacting with you so that our disclosures improve. Thank you so much. And all of you have a nice day. Thank you.
operator
Thank you. On behalf of IIFL Capital Services limited that concludes this conference. Thank you all for joining us. And you may now disconnect your lines.
R. Venkataraman
Thank you. Thank you.