Revising earnings model for India Infoline (IIL) to factor in the proposed preferential allotment by Orient Global and recent infusion in the insurance distribution business. IIL will need capital to fund margins with exchanges. It may likely increase capital contribution to support growth in its finance business as well. However, expect high cash in its balance sheet and consequently its leverage will likely be lower-than-expected earlier. Changing earnings estimates by 5% for FY2009E and 11% for FY2010E.
Kotak has tweaking the price target to Rs1,350 from Rs1,300 (based on FY2009); our fair value based on FY2010E is Rs1,500. The stock looks overpriced at the current levels and recommend investors to book profits.