Mumbai,January 28, 2021: Motilal OswalFinancial Services Ltd. announced its results for the quarter and nine month endedDecember 31, 2020 post approval by the Board of Directors at a meeting held inMumbai on January 28, 2021.

Performance for the quarter and nine month ended December 31, 2020:

• In Q3FY21, consolidated revenues grew by 45% YoY at Rs 1,009 cr, Consolidated PAT grew by 102% YoY at Rs 334 cr including gains on investments (Rs 212 cr, +280% YoY).
• Consolidated revenues in 9MFY21 grew by 34% YoY at Rs 2,723 cr, consolidated profit grew by 82% YoY at Rs 797 cr.

Key highlights for the Q3FY21

• Highest-ever Consolidated Quarterly Revenues & Profits. Strong Sequential growth revenues and profitability across businesses.
• Broking - Highest ever Revenues, market share gains 20 bps YoY to 2.8%, strong traction in cash market share, highest ever quarterly clients addition, significant investments made in last 12 months in expanding talent pool & distribution network.
• Asset Management– Highest ever AUM, MF gross sales gaining traction, strong traction in SIP addition, Introduced digital platform for on boarding PMS clients. IREF V launched with target size of Rs 8 bn.
• Home Finance - Sharp reduction in cost of funds driving margin expansion, improvement in collection efficiency, continued superior quality of new book underwritten, traction in login/sanction pipeline, and gearing up for Q4 and FY22 with expansion in sales FOS.
• Consolidated net worth is at all-time high at Rs 3,931 cr, net debt is Rs 3,703 cr. Excluding Home finance, net debt is Rs 1,134 cr. Total D/E declined to 1.2x. Ex-MOHF D/E stood at 0.5x. Net of investments, we have a net cash balance sheet. RoE for 9MFY21 stands at 34% (ex-OCI).
• During 9MFY21, company has completed Buyback of its equity shares amounting to Rs 1.5 bn (including tax) resulting in increase in promoter equity in the company by 1.3% to 70.67%.
• The board has declared Interim dividend of Rs 5 per share (FV Re 1/share).
• Besides financial performance, recent time has been very eventful in terms of our successes in brand building, advertising and several other fronts. MOFSL rank 1^st “Best Local Brokerage” in Asia Money broker’s poll 2020. MOFSL got inducted in “Hall of Fame” at 10^th Financial Advisory Awards 2019. Our latest Ad on “Skin in the Game” has received appreciation in various media. These and several other recognitions of Motilal Oswal as a preferred consumer and employee brand in financial services space.

Speaking on the performance of the company, Mr. Motilal Oswal, MD & CEO said “Duringthis unprecedented time, we have successfully migrated all of our employees toWFH and despite WFH we haven’t witnessed much impact on our businesses. Infact, in most of our fee based businesses are touching new high in terms ofscale. Our retail broking business which is our cash cow business has achievednew highs on various parameters and benefitting from industry consolidationwith its knowledge driven phygital offerings. Our Institutional Brokingbusiness has been ranked #1 as local brokerage house in Asiamoney poll 2020.Our strategy to invest business profits in our own equity investment productshas registered highest ever profits and as result our Net worth has touched newhigh. Moreover, our strategy to diversify our business model towards linearsources of earnings continues to deliver results. Our Asset Management businessis likely to gain from process driven investing and its niche offerings. OurHousing finance business is geared up for profitable growth under newleadership. Each of our 7 businesses offers headroom for growth.

Performance ofBusiness Segments for the quarterand nine month ended December 31,2020

·      Capital markets Businesses (Broking& Investment banking)

o  Capitalmarkets comprises of Retail Broking, Institutional Equities and InvestmentBanking business. Revenues for this segment were Rs 431 cr, +39% YoY in Q3FY21and Rs 1,198 cr in 9MFY21, +33% YoY. Capital market businesses have contributed ~44% of consolidatedrevenues. Profits were Rs 211 cr (ex-exception item), +54% YoY and contributed~18% of consolidated PAT during 9MFY21.

o  Brokingand distribution business profit grew by 59% YoY at Rs 77 cr in Q3FY21 led by healthyvolume growth of 98% YoY and gain in market share.

o  In RetailBroking & Distribution, our Market share has improved by 20 bps on YoYbasis to 2.8%. We have witnessed strong traction in new clientaddition driven by Franchisee and retail channel , total ~190,000 clientsacquired in Q3FY21, +246% YoY. Active clients have also registered 46% YoYgrowth at 4.95 lacs as of December 2020.

o  Our strategy to bring in linearity through thetrail-based distribution business is showing results. Distribution AUM grew by15% QoQ at Rs 11,932 cr as of Q3FY21. With only 13% of the 1.8 million clientbase tapped, we expect a continued increase in AUM and fee income as number ofclients to whom we have cross sold and number of products per client cross soldrises.

o   In Institutional Broking, team winsbig in Asiamoney poll 2020. Ranked #1 Best local brokerage House, Best researchteam, Best sales and sales trading and Best Corporate access. Strongimprovement in domestic client rankings in 9M with top 3 rank retained in mostclients. This has been the result of focus driven differentiated research productswith 250+ companies covering 21 sectors.

o  Investment Banking business continues to engage on a wide cross-section ofmandated transactions across capital markets and advisory. In Q3, we participatedin one large OFS in BFSI space.

·      Asset Management businesses (AMC,PE and PWM)

o  Asset Management business AUM across MF, PMS & AIF stood at Rs 43,871 cr, +14% QoQ.Our AMC ranks 15 by total equity assets; in PMS we maintain a leading position.Strong growth of 32% QoQ in PAT for the quarter at Rs 38 cr. In 9MFY21, AMC’sprofit was impacted on account of lower average AUM post unprecedented marketcorrection in March and also due to cut in TER in MF.  However, MF yields have improved during thequarter resulting in overall yield improvement.

o  OurEquity MF AUM of Rs 26,204 cr is just 1.8% of the Industry MF Equity AUM of Rs 14tn. We have seen improvement in performance of several products. Our grosssales market share was stable and redemption market share declined onsequential basis. However, we too witnessed net outflow in-line with Industry.

o  We have witnessed strong traction in SIP addition and realisation.

o  Ourshare of Alternate assets, comprising of PMS & AIF, is the highest among AMC’sat ~40%.

o  Private Equity has committed investment AUM of Rs 6,500 cr across 3 growthcapital PE funds and 4 real estate funds. In Q3FY21, revenues stood at Rs 27 crand PAT stood at Rs 7 cr. The 1^st growth fund (IBEF 1) has deliveredan XIRR of ~26%. Average IRR on exited investments in Real estate funds is21%+. We have launched IREF V with target size of Rs 8 bn.

o  Wealth Management business AUM grew by 13% QoQ at Rs 22,678 cr in Q3FY21. Wealthbusiness revenue grew by 31% & 20% YoY in Q3FY21 & 9MFY21 respectivelyled by strong net sales of +583% YoY at Rs 1,807 cr in 9MFY21. Gross& Net sales were multi-quarter high. Yield stood at ~62 bps. RM count of this business stood at 124. Our trailrevenues predominantly cover our fixed costs.

o  Overall Assetand Wealth Management revenues were Rs 189 cr & Rs 514 cr in Q3FY21& 9MFY21 respectively. Asset & Wealth contributes 19% of consolidatedrevenues. Profits were Rs 53 cr & Rs 126 cr in Q3FY21 & 9MFY21respectively and contributed 16% of consolidated profits.

·      Housing finance business

o  MotilalOswal Home Finance (MOHFL) reported profit of Rs 4.7 cr in Q3FY21. Reportedprofit looks suppressed due to higher tax on account of reinstatement of deferredtax asset post migration to new regime. Excluding this, PAT for the quarterwould have been Rs 11.5 cr.

o  NII grewby 20% YoY and NIM expanded 120 bps YoY/QoQ at 6.4% in Q3FY21.

o  Yield onAdvances remained flat at 14.25% in Q3FY21 while of Cost of Funds is down by 37bps QoQ / 163 bps YoY to 8.95%, resulting in expansion in Spread by 38bps QoQto 5.3%.

o  We haveraised Rs 11 bn in 9MFY21 at average cost of 7.4%. We expect average CoF totrend lower in coming quarters.

o  Loanbook stood at Rs 3,544 cr as of 9MFY21. Disbursements in 9MFY21 were Rs 133 cr.Under new leadership, business is geared up for growth in disbursements. Salesforce expansion is currently underway.

o  GNPA at 2.9%,NNPA at 2.3%. In 9MFY21 total credit cost at Rs 61 cr due to acceleration inCovid provisioning.

o  Opex wasbrought down to Rs 22 cr in Q3FY21 and is down ~25% from the high. As a result,Cost to Income ratio is down to 33% from 44% in Q3FY20.

o  Strongsupport from parent continues with total capital infusion to Rs 8.5 bn. NetGearing stands at 2.9x and Tier 1 CAR remains robust at 48%.

o   Limited borrowing repayment for next1 year, strong undrawn borrowing lines, Cash on Balance sheet of Rs 213 cr placesus in comfortable liquidity situation.

·      Fund based investments includes sponsorcommitments to our AMC & PE funds and strategic equity investments.

o  Fundbased investments have registered Highest ever gains in a quarter of Rs 212 cr andRs 516 cr in 9MFY21

o  Totalquoted equity investment including unrealised gains was Rs 1,889 cr as of Q3FY21.Cumulative XIRR of these investments is ~16.3% (sinceinception).

o  Total equity investment including alternate fundswas at Rs 2,601 cr as of December-20. XIRR of 26% on alternate equityinvestments.

About Motilal Oswal Financial Services Limited

Motilal Oswal Financial Services Ltd. is a financial services company.Its offerings include capital markets businesses (Retail broking, Institutionalbroking & Investment banking), Asset & Wealth Management (Asset Management,Private Equity & Wealth Management), Housing Finance & Equity basedtreasury investments. Motilal Oswal Financial Service won the ‘Brand of theYear’ award at the IBLA CNBC TV 18. Motilal Oswal Securities won the ‘Best Performing National Financial Advisor EquityBroker' award at the CNBC TV18 Financial Advisor Awards for the 6^th time.It was ranked the Best in Events/Conferences, ranked amongst Top-2 for OverallSales Services & Best Roadshows/Company Visits & amongst the Top-3 inBest Local Brokerage, Best Execution & Sales Trading Visits at the Asia MoneyAwards 2015. Motilal Oswal Private Equity won the ‘Best Growth CapitalInvestor-2012’ award at the Awards for PE Excellence 2013. Motilal OswalPrivate Wealth Management won at the UTI-MF CNBC Financial Advisor Award in HNIWealth Management category for 2015.

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