Brokerage and Securities Industry:

Research solutions as a value driver

9th Apr, 2015

 Securities and Brokerage industry: the changing
landscape
Global headwinds arising from macro developments in the US, Europe, and
Persistent
Middle East have led to continuing uncertainty and market volatility
Macro Retail investors remain cautious and risk-averse; retail participation down to
Uncertainties <40% compared to 89% in 2001, client activity ratio at 4% from 12% in 2008

Retail segment equity brokerage pool recovered marginally (by 1-2%) to ~Rs.
Pressure on
9500 crore in FY14, after witnessing multi-year declines
Revenue and Overall institutional brokerage pool has undergone significant downsizing,
Margins standing at less than INR 2000 crore in FY13 from ~INR 2400 in FY11-12

Increasing By mid-2014, the market share of Top 100 brokers on NSE stood at almost
Pace of 80% , increasing from 73% two years back
Compelling need to build scale for managing increasing operational costs-
Consolidation
largely because of technology upgradation and compliance costs

By mid-2014, online and mobile trading accounted for ~40% of retail volumes.
Technological Even for traditional brokerages, this accounts for up to 50% of trading
Disruption volumes
Zero or discount broking, no-frills model gaining traction

Source: ICRA, Forbes, Business Standard

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What are the implications?

The changing business landscape means, players have to reengineer all core processes to achieve:

HIGHER OPERATIONAL FLEXIBILITY

SUSTAINED COST SAVINGS

HIGHER EFFICIENCY & PRODUCTIVITY

DRIVE CUSTOMER ACQUISITION & RETENTION

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 The COST DYNAMICS of sell-side research set-up.
The model is no longer sustainable!

Coverage cost/
ticker is 2-6 8-10 companies under coverage per analyst
lakh p.a.
This excludes Median sector analyst salary of INR 40-50 lakh per
overheads and annum
admin costs Sector
Analyst

At least one research analyst/associate

mapped to a sector analyst
Research Associate Median research associate/analyst salary of
INR 8-12 lakh per annum

At least one junior associate mapped

to a research associate
Junior Associates Median junior associate salary of
INR 5-7 lakh per annum

Source: Dion analysis based on inputs from industry sources

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Whats the solution? Process Innovation

Data
Human
Skills

Tech

Business Impact

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Words of wisdom from the Sage of Omaha

"To invest successfully, you need not understand beta, efficient markets, modern
portfolio theory, option pricing or emerging markets. You may, in fact, be better off
knowing nothing of these. That, of course, is not the prevailing view at most business
schools, whose finance curriculum tends to be dominated by such subjects. In our
view, though, investment students need only two well-taught courses - How to
Value a Business, and How to Think About Market Prices.

Warren Buffett, Chairmans Letter, 1996

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Dion: Key Investment Research Capabilities

Equity
Research

M&A Sector
Support Reports
Investment
Research
Offerings

Financial Thematic
Modeling Reports

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 Combining Research and Technology to Create Global Products
Select Engagement Caselets on research and technology based solutions

Client: Visible Alpha, a Consortium of leading global investment banks

Engagement: Conceptualizing and developing a Consensus Modeling platform, targeted at generating
DEEP consensus models for buy-side analysts and fund managers
Operational Model: Dion has created a dedicated team of c.30 analysts and engineers to build the product
from scratch, combining human capability and proprietary technology. The platform helps in collating,
analyzing, and processing cross-broker (sell-side) financial models to generate rigorously vetted consensus
models
Key Benefits: The client got entire solution under one roof, which would have been impossible otherwise.
This optimized product development process bring engineers and research analysts together. Entire
product development cost is a fraction of what it would have cost otherwise.

Research & Technology

Enabled Solutions
Client: US-based mid-sized VC firm focused on software and automation sector
Engagement: Designing a comprehensive portfolio monitoring solution for fund managers
Operational Model: Dion employed AlphaClick, its propriety portfolio monitoring application, to collect,
validate, synthesize and map complete private company financials and presented in a customizable user
application with dynamic dash-boards and functionalities
Key Benefits: The applications highly intelligent built-in logics and formulae, transformed as reported
data into standardized industry vide reporting formats to ensure consistency and data integrity
AlphaClick proactively highlighted reporting anomalies and helped reconcile data as per standard
accounting practices
Processing time vastly reduced and achieved significant cost reduction to monitor portfolio performance

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Leveraging Data and Technology to Deliver Value
Select Engagement Caselets across data management segment

Client: A large broking firm in India

Engagement: Conceptualizing and developing an Interactive customer portal
Operational Model: Dion is providing turnkey solution for creating the portal using latest technology and rich
data presentation and visualization for customer engagement.
Key Benefits: The client got entire solution under one roof, which would have been impossible otherwise.
This optimized development process with quick turnaround at much lower cost.

Client: A large Indian media group

Engagement: Providing financial content to its users on web-portal
Operational Model: Dion is providing turnkey solution by creating content rich pages with functionality for
Financial Data & user engagement
Technology Enabled Key Benefits: The client got entire solution under one roof, which would have been impossible otherwise.
Solutions The delivery happened in record time with very little hassle to the client.

Client: A large Indian corporate

Engagement: Developing Investor Relations microsite
Operational Model: Dion is providing turnkey solution by creating content rich pages with functionality for
user engagement
Key Benefits: The client got entire solution under one roof, which would have been impossible otherwise.
Client came to us after its exiting vendor failed to deliver, and we turned around the job within required
timelines.

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 Research support across diverse areas
Select Engagement Caselets across financial & business research

Client: Leading Indian brokerage and financial advisor

Engagement: Involved in providing research support across multiple asset classes including equities, debt and
commodities
Operational Model: Dion team provided end-to-end research support which involved suggesting stock picks, creating
detailed research reports with financial models, and preparing daily and monthly newsletters for ECM, DCM, and
Commodities segments
Key Benefits: The engagement enabled the client to expand coverage to other segments / sectors. Had access to
highly specialized team with cross functional experience to deliver value-add output
Financial Research
Client: US based hedge fund
Engagement: Included - Financial / Equity Model Build-up and Model Review / Maintenance
Operational Model: Dion has created a dedicated team of analysts, which helps in creating and reviewing financial
models of US listed stocks. Team helps in preparing detailed financial models including valuation using DCF, Relative
Valuation and SOTP approaches
Key Benefits: Dion helped restructure clients operational structure to reduce fixed cost by offshoring work to Dion and
increase coverage span. Increased coverage through process standardization and optimum utilization of domain
focused resources.

Client: A US-based boutique investment club

Engagement: Preparing daily equity market report and news-based analytical stories targeted at the subscribers of
investment club , who are high net worth investors and independent traders
Operational Model: Dion set-up an offshore delivery process to provide the daily report with high-quality JPEG images
by 8:30 AM , EDT on all US trading days
Key Benefits: The client has achieved 30% growth in the subscriber base for the daily newsletter service since
Business Research outsourcing the entire process to Dion, at a lower cost and with more reliable quality

Client: Among the top five hotel chains globally

Engagement: Conducting opportunity assessment, market potential and competitive benchmarking studies to support
the global strategy and market insights team based in Singapore
Operational Model: Dion conducted comprehensive desk and primary research to analyze key markets in Asia Pacific
Key Benefits: The research output enabled the strategy & market insights team to achieve faster TAT and conduct a
more-thorough deep-dive on market opportunities and competitive landscape

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DION A Global Technology, Research, & Information
Solutions Provider

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 90%
of the worlds
largest financial
institutions are with
us

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600 employees

650 clients in 88 countries

250 strong development team

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FEW OF OUR GLOBAL CLIENTS (1)

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FEW OF OUR GLOBAL CLIENTS (2)
A partial list of our clients:

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Appendix
(FOR REFERENCE ONLY. NOT TO BE PRESENTED)

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Equity Research

A global firm with proven experience in preparing equity research across industries and markets

A leading provider of white-label and bespoke research reports

Over 50 highly skilled staff comprising CFAs, MBAs and Statistical Modelers

Strong client base of leading I-Banks, Equity Research firms & Security Brokers

Service Bouquet
Buy-side and sell-side reports including initiating coverage reports, standard reports, issue reports, investor notes, earning
notes, and event based reports
Creating / updating financial models and conducting background research on company / industry as per the coverage-
universe

Research Methodology
Comprehensive desk research methodology analyzing company filings, analyst notes, transcripts, analyst presentations
etc.
Focused primaries with key opinion leaders and industry practitioners to supplement secondary research process

Sector Focus Coverage Universe

Financial Services TMT Asia Pacific, US, Europe & Other Emerging Markets
Pharmaceutical & Healthcare Energy Comprehensive coverage across BSE, NSE, S&P
IT Services Infrastructure 500, Dow Jones, FTSE, ASX, and NIKKEI indexes

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RIS Solutions- Newsletters
Significant experience in designing, conceptualizing and producing newsletters on global financial markets

Dion prepares a range of newsletters and market reports for sell-side, buy-side and independent research
providers
The newsletters are tailored and aligned to each clients unique template, style, and context
Comprehensive suite of solutions encompassing market newsletters, DCM & ECM reports and commodity updates
covering global and regional markets

Partial to fully automated application-based newsletter templates eliminate human errors

Key Dedicated newsletter desk works as an extension of clients research team providing regular and ad-hoc
Benefits research support with minimal supervision

Almost two decades of experience and a proven technology platform for newsletter preparation and delivery

Offers DTP-quality semi-automated newsletters using D-RIVE application

Automates the process of capturing and analyzing sector / asset class specific data and economic
updates on weekly, monthly, quarterly and need-based basis
Offers 360 research solutions: idea generation; report preparation, review, and maintenance; and
database / repository management
Newsletter Helps reduce operational cost and improve turnaround time
Support Delivered 300+ newsletters across asset classes
Solutions Research delivered in multiple formats such as PPT, HTML, Word and PDF documents

Product Bouquet
Sector, FX, and Currency Updates Fixed Income Reports DTP / Graphics Support
Global & Domestic Equity Market
Commodity Reports Macro Economic Reports
Reports

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 1 2 3
RIS Solutions- Financial Modeling
Robust and user-friendly financial models providing business valuation and decision support solutions

Dion has significant experience and expertise in the designing, maintaining and updating a suite of financial
models for business valuation and strategic decision making
Our financial model solutions enable clients to translate their business decision options into quantifiable financial
implications

Our models find application in various transactional and business evaluation decision making
Model Build / Update Service Offering
Typically used for Project Finance & PPP deals, M&A and MBO/LBO
transactions, Refinancing & Equity raising and Business performance tracking,
among others
Involves conceptualizing framework, designing models and updating already
developed models on monthly, quarterly, and need based frequency
Model Review / Fairness Opinion Services
We offer tailored independent reviews of financial models across industries and
Financial Modeling functionalities
Solutions
Engagements include thorough line-by-line review, model re-write, detailed
model risk and scenario analysis
Engagement Models
We can support clients through FTE and project / output based models based
on demand and turnaround time requirements
Provide customized automated solution based on our propriety platform D-
RIVE, thereby offering financial modeling solution for various listed / unlisted
companies

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Sector Research

Dion supports CXOs in Corporates, M&A Advisory Firms, and Sell-Side Entities with accurate and incisive answers
to critical questions on industries, market participants, innovation and technology trends

Significant experience in conducting sector analysis including deep-dive and rapid research assignments
Global Coverage: We have worked with some of the leading buy-side entities globally to understand market
Sector Research

and competition dynamics

Unparalleled Depth and Breadth of Solutions: Worked across 30+ sub-sectors in over 15 countries
Value-Add solutions: Rigorous research methodology to conduct sector analysis encompassing primary and
secondary analysis; translation support in over 10 global languages
Analysis Bouquet

Industry Analysis Sector Valuation Periodic Sector Updates

Sample Analysis done across key industry areas

Pharma Prepared a detailed industry report on Indian Pharmaceutical market highlighting market value / value by
segments and therapeutic areas
Analysis included: Growth drivers, regulations, business segments, product pipeline, competition,
opportunity areas and action points, financial projections and future outlook

e-Commerce
Worked with a global client to analyze Singapores e-commerce industry and identify potential M&A targets
Analysis included evaluating the market potential, identifying key growth segments, forecasting future
growth till 2017 and profiling potential targets

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Thematic Research
Rigorous Methodology to generate breakthrough ideas
Dion conducts thematic analysis across asset
classes, geographies, industries and investment
ideas
Dedicated industry & company
research teams churn ideas / trends
and identify opportunity areas
Dions analysts present a
shortlist of themes, backed
by rigorous research and
data to clients
Uses qualitative
and quantitative
techniques for
analysis
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Key Highlights
Coverage: Produced over 40
thematic reports for Indian /
Global clients
Process Dividend:
Dion research teams store
market / company intelligence,
which helps in developing a
knowledge base
Dedicated market intelligence
teams identify key trends / ideas
/ themes and suggest action
points to clients
Prepare custom reports for ad-
hoc projects across markets
Methodology: Employ
qualitative and quantitative
techniques to generate output
Domain Competence: Sector
experts, cross-functional teams
of MBAs, CFAs, and Economists
M&A Support

Dion is a reputed service provider in financial research space serving leading IBs and Corporate Finance firms

Dion has significant experience in M&A research support engagements and has delivered over
200 client projects till date
Project Engagements: FTE, project based, output based and on hourly basis
Teams Supported: Corporate Advisory, M&A, Project Finance, Group Strategy and Corporate
Development
Industry Groups: TMT, Oil & Gas, Metals & Mining, Infrastructure, FIG, Hospitality etc.
Geographic Focus: North America, Europe, Asia Pacific and Africa

Experience
Summary
Service Bouquet

Company Research / Profiles Reports Macro / Industry Data Annotated Share price charts

Industry Overviews Debt Profiles Legal Entity Diagrams

Financial / Operational Benchmarking Capital Structure Analysis Broker Analysis

IPO / Transaction Case Studies Trading & Transaction Comps Shareholding Analysis

Other Ad-hoc Research DCF Valuation Investor Presentation Support

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Contact

Dion Global Solutions Ltd.

Website: www.dionglobal.com

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