Mumbai,October 30, 2020: Motilal Oswal FinancialServices Ltd. announced its results for the quarter and half year ended September30, 2020 post approval by the Board of Directors at a meeting held in Mumbai onOctober 30, 2020.

Performance for the quarter and half year ended September 30, 2020:

• In Q2FY21, consolidated revenues grew by 14% YoY at Rs 747 cr, Operating Profit (PAT) grew by 33% YoY at Rs 123 cr, Consolidated PAT grew by 108% YoY at Rs 296 cr including MTM gains (Rs 173 cr, +246% YoY).
• Consolidated revenues in H1FY21 grew by 8% YoY at Rs 1,380 cr, Operating Profit (PAT) for H1FY21 grew by 18% YoY at Rs 226 cr and consolidated profit grew by 70% YoY at Rs 463 cr.

Key highlights for the Q2FY21

• Highest-ever Consolidated Quarterly Revenues & Profits. Strong Sequential growth revenues and profitability across businesses.
• Broking - Highest ever Revenues & PAT, market share gains 80 bps YoY & 10 bps QoQ, highest ever quarterly clients addition, significant investments made in last 12 months in expanding talent pool & distribution network.
• AMC - AUM back to pre-covid level, gross sales gaining traction, digitally launched NFO of S&P 500 index fund and Multi asset fund.
• Home Finance - Sharp reduction in cost of funds driving margin expansion, strong traction in collection efficiency during and post moratorium periods, aggressive covid-related provisions of Rs 23 cr, continued superior quality of new book underwritten, industry veterans onboarded to run the business - Arvind Hali joined as MD & CEO and Amar Bahl joined as Deputy MD & COO.
• Consolidated net worth stood at Rs 3,490 cr, net debt is Rs 3,535 cr. Excluding Home finance, net debt is Rs 832 cr. Overall debt is down by 2% YoY. Total D/E declined to 1.3x. Ex-MOHF D/E stood at 0.4x. Net of investments, we have a net cash balance sheet. RoE for H1FY21 stands at 36% (ex-OCI & exceptional item).
• Company has completed Buyback of its equity shares amounting to Rs 1.48 Cr (including tax) resulting in increase in promoter equity in the company by 1.3% to 70.67%.
• Besides financial performance, recent time has been very eventful in terms of our successes in brand building, advertising and several other fronts. MOFSL got inducted in “Hall of Fame” at 10^th Financial Advisory Awards 2019. MOFSL rank 2^nd “Best Local Brokerage” in Asia Money broker’s poll 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. In fact,in most of our fee based businesses we have seen strong traction; retailbroking business which is our cash cow business has achieved new highs acrossevery parameter. Our strategy to diversify our business model towards linearsources of earnings continues to deliver results. Our Asset Management businessis likely to gain from strong product performance and its niche positioning. OurHousing finance business is geared up for profitable growth under newleadership. Our traditional broking business benefitted from industryconsolidation with its knowledge driven phygital offerings. Each of our 7 businessesoffers headroom for growth.

Performance ofBusiness Segments for the quarterand half year ended September 30,2020

·      Capital markets Businesses (Broking& Investment banking)

o  Capitalmarkets comprises of Retail Broking, Institutional Equities and InvestmentBanking business. Revenues for this segment were Rs 424 cr, +37% YoY in Q2FY21and Rs 767 cr in H1FY21, +31% YoY. Capital market businesses have contributed ~57% of consolidatedrevenues. Profits were Rs 80 cr, +44% YoY and contributed ~27% of consolidatedPAT.

o  Brokingand distribution business profit grew by 51% YoY and 33% QoQ at Rs 81 cr in Q2FY21led by healthy volume growth of 70% YoY and gain in market share. (PAT growth on YoY basis would have been 69% afterexcluding the impact of adoption to new tax regime in Q2FY20).

o  In RetailBroking & Distribution, our Market share has improved by 80 bps on YOYbasis to 3.1%. We have witnessed strong traction in new client additiondriven by Franchisee and retail channel , total ~117,000 clients acquired in Q2FY21,+227% YoY. Active clients have also registered 35% YoY growth at 4.5 lacs as ofSeptember 2020.

o  Our strategy to bring in linearity through thetrail-based distribution business is showing results. Distribution AUM grew by9% QoQ at Rs 11,123 cr as of Q2FY21. With only 14% of the 1.65 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, Strongimprovement in domestic client rankings in H1 with top 3 rank retained in mostclients.This has been the result offocus driven differentiated research products with 250+ companies covering 21sectors. We hosted two large conference in September, AGIC & Ideationconference where >200+ corporate participated. Frequency of arrangingwebinars and expert calls has gone up significantly.

o   InvestmentBanking business continuesto engage on a wide cross-section of mandated transactions across capitalmarkets and advisory. In Q2, we participated in two large QIPs in BFSI space.

·      Asset Management businesses (AMC,PE and PWM)

o  Asset Management business AUM across MF, PMS & AIF stood at Rs 38,581 cr, +10% QoQ.Our AMC ranks 15 by total equity assets; in PMS we maintain a leading position.PAT for the quarter stood at Rs 29 cr as AMC’s profit was impactedon account of lower average AUM post unprecedented market correction in Marchand also due to cut in TER in MF.  However, this impact would be neutralised post TER revision in Octobermonth.

o  OurEquity MF AUM of Rs 22,216 cr is just 1.9% of the Industry MF Equity AUM of Rs 10.2tn. We have seen improvement in performance of several products. Severalschemes rank top decile in performance since inception as well as over the last1 year. We witnessed traction ingross flows.

o  MOAMC digitallylaunched NFO of Multi Asset fund in Q2FY21.

o  Ourshare of Alternate assets, comprising of PMS & AIF, is the highest among AMC’sat ~42%.

o  Private Equity has committed investment AUM of Rs 6,500 cr across 3 growthcapital PE funds and 4 real estate funds. In Q2FY21, revenues stood at Rs 27 crand PAT stood at Rs 7 cr. The 1^st growth fund (IBEF 1) has deliveredan XIRR of ~27%. Average IRR on exited investments in Real estate funds is21%+. Strong performance and positioning has also aided new fund raise, we havehave achieved final close of IREF IV fund at ~Rs 1,150 cr in February2020. The fund has deployed Rs 580 cr across 10 investments.

o  Wealth Management business AUM grew by 13% QoQ at Rs 20,010 cr in Q2FY21. Wealthbusiness revenue grew by 25% & 14% YoY in Q2FY21 & H1FY21 respectivelyled by strong net sales of +317% YoY at Rs 1,342 cr in H1FY21. Gross& Net sales were multi-quarter high. Yield has improved in Q2FY21 by 24bps at ~78 bps led by

highernet sales of high yielding equity product during the quarter. RM count of thisbusiness stood at 128. Our trail revenues predominantly cover our fixedcosts.

o  Overall Assetand Wealth Management revenues were Rs 178 cr & Rs 326 cr in Q2FY21& H1FY21 respectively. Asset & Wealth contributes 24% of consolidatedrevenues. Profits were Rs 44 cr & Rs 73 cr in Q2FY21 & H1FY21respectively and contributed 15% of consolidated profits.

·      Housing finance business

o  Motilal Oswal Home Finance (MOHFL) reportedprofit of Rs 6 cr in Q2FY21. Reported profit looks suppressed due to higher tax on account ofreinstatement of deferred tax asset post migration to new regime. Excludingthis, PAT for the quarter would have been Rs 13 cr.

o  MOHFL board has appointed Mr. Arvind Hali as MD & CEO and Mr. AmarBahl as Deputy MD & COO. Both are industry veterans with over 20+ years ofexperience in mortgage industry.

o   NII grew by 3% YoY and NIM expanded 20 bps YoY at 5.2% in Q2FY21.

o   Yield on Advances improved by 10 bps YoY to 14.2% in Q2FY21 while of Costof Funds is down by 50 bps QoQ / 120 bps YoY to 9.3%, resulting in expansion inSpread by 40bps QoQ to 4.9%.

o   We have raised ~Rs 1000 Cr in H1FY21 at average cost of 7.6%. We expect averageCoF to trend lower in H2FY21.

o   Loan book stood at Rs 3,652 cr asof H1FY21. Disbursements in H1FY21 were Rs 84 cr. New booksourced from April’18 validates the new credit policy with only 1 case in NPAout of ~6700 loan cases.

o   GNPA at1.6%, NNPA at 1.2%. We have further enhanced Covid provisioning in Q2FY21 to Rs23 cr (~70 bps).

o  Opex was brought down to Rs 20 cr in Q2FY21 and isdown ~30% from the high. As a result, Cost to Income ratio is down to 36% from44% in Q2FY20.

o  Strong support from parent continues with totalcapital infusion to Rs 850 Cr. Net Gearing stands at 3.1x and Tier 1 CARremains robust at 44%.

o  Limited borrowing repayment for next 1 year, strongundrawn borrowing lines (Rs 715 cr), Cash on Balance sheet of Rs 511 cr placesus in comfortable liquidity situation.

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

o  Fund based investments like commitments to our asset management products.

o  Totalquoted equity investment including unrealised gains was Rs 1,430 cr as of Q2FY21.Cumulative XIRR of these investments is ~13.3% (sinceinception).

o  Total equity investment including alternate fundswas at Rs 2,130 cr as of September-20. XIRR of 27.9% 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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