Mumbai,May 11, 2020: Motilal OswalFinancial Services Ltd. announced its results for the quarter ended and fullyear ended March 31, 2020 post approval by the Board of Directors at a meetingheld in Mumbai on May 11, 2020.

Performance for the quarter and full year ended March 31, 2020

• Consolidated revenues stood at Rs 676 cr, +2% YoY in Q4FY20. Consolidated operating PAT was at Rs 97 cr in Q4FY20. Consolidated revenues for FY20 were at 2,613 cr and consolidated operating PAT for FY20 was at Rs 398 cr, +56% YoY.  Operating PAT is excluding MTM on fund based investments. FY20 reported profit was lower at Rs 183 cr on account of MTM loss on fund based investments.
• Asset and wealth business continues to be the highest contributor to consolidated profit consecutive for 2^nd year.
• Some of the key highlights for the FY20 include AMC PAT grew by 9% YoY, AMC has expanded product offerings in active as well as passive category, Expanded its branch, sales and IFAs reach, Positive net flows in AMC for consecutive three quarters, Average IRR on exited investment from IREF II / III schemes are 21%/ 22% respectively, IREF IV achieved its final close in March 2020 at  Rs 1,150 cr, 13% YoY growth in Wealth client acquisition, Traction in distribution business aided by newly started insurance business, Accelerated pace of new client addition (+72% YoY growth) in broking business, Market share in high yielding cash segment is at multi-quarter high, Rating upgrade from CRISIL for MOHFL to AA- (Stable) from A+ earlier and Normalcy restored in MOHFL’s profitability, NPA at 1.8%, 1+ DPD on falling trajectory, PCR increased to 66%, Superior quality of new book underwritten, Lower incremental credit cost and margin expansion.
• Consolidated net worth stood at Rs 3,086 cr, net debt is Rs 4,000 cr. Excluding Home finance, net debt is Rs 1,164 cr and net of investments, we have a net cash balance sheet. Operating RoE (ex-fund based investments) for FY20 stands at 32% whereas reported RoE stands at 7%.
• Dividend payout ratio of 39% in FY20. Also, company has initiated Buyback of equity shares upto Rs 150 cr (excluding tax).
• Besides financial performance, the last financial year has been very eventful in terms of our successes in brand building, advertising and several other fronts. In FY20, 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. MOPWM wins “Best Boutique Wealth Manager- India” for 2nd consecutive year by The Asset Triple A Awards. These, and several other awards, are recognition 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 “Ourstrategy to diversify our business model towards linear sources of earningscontinues to show results. Our Asset Management business is likely to gain fromstrong product performance and its niche positioning. Our Housing financebusiness is set for new beginning as all legacy issues are behind with incrementalfocus on profitable growth. Our traditional broking business continues to becash cow and getting benefited from industry consolidation on the back of itsknowledge driven phygital offerings. Each of our 7 businesses offers headroomfor growth. Prestigious awards like “Hall of fame”, BestLocal Brokerage of the year, “Best boutique Wealth Manager” and several othershave made all associated with the group immensely proud”.

Performance ofBusiness Segments for the quarterand full year ended March 31, 2020

·      Asset Management businesses (AMC,PE and PWM)

o  Asset Management business AUM across MF, PMS & AIF stood at Rs 29,691 cr. Our AMCranks 15 by total equity assets; in PMS we maintain leadership position. PATfor the quarter stood at Rs 36 cr (+6% YoY) and for the year FY20 stood at Rs 160cr (+9% YoY).  

o  OurEquity MF AUM of Rs 15,981 cr is just 1.9% of the Industry Equity AUM of Rs 8.1tn. We have seen improvement in performance of several products. Severalschemes rank top decile in performance over 1 year and since inception as ofFeb 20. This has resulted intraction in our gross as well as net flows.

o  Further,MOAMC has also launched Large & Mid-Cap fund under active category and alsolaunched various index funds under passive category.

o  Ourshare of Alternate assets, comprising of PMS & AIF, is the highest among AMC’sat ~46%.

o  Private Equity manages an AUM of Rs 6,530 cr (+3% YoY) across 3 growth capital PEfunds and 4 real estate funds. In FY20, revenues grew by 3% YoY (ex-carry) atRs 107 cr and PAT stood at Rs 22 cr. The 1^st growth fund (IBEF 1)has delivered an XIRR of ~27%. Average IRR on exited investments in Real estatefunds is 21%+. Strong performance and positioning has also aided new fund raise,we have have achieved final close of IREF IV fund at ~Rs. 1,150 cr in March 2020.

o   WealthManagement business AUM stoodat Rs 15,624 cr in FY20. RM count of this business stood at 129. Our trailrevenues predominantly cover our fixed costs. Investments in strong RM additionsuppressed reported profitability.  New MD & CEO has joined us with over 17years of experience in Wealth Management Industry. 

o  Overall Assetand Wealth Management revenues were Rs 764 cr in FY20 and contributed30% of consolidated revenues. Profits were Rs 188 cr and contributed 46% ofconsolidated profits.

·      Capital markets Businesses (Broking& Investment banking)

o  Capitalmarkets comprises of Retail Broking, Institutional Equities and InvestmentBanking business. Revenues for this segment were Rs 1,237 cr in FY20 andcontributed ~48% of consolidated revenues. Profits were Rs 179 cr in FY20 andcontributed ~44% of consolidated PAT. Broking and distribution business profit stoodat Rs 188 cr in FY20 led by healthy volume growth and better operating leverageon the higher and linear revenues.

o  In RetailBroking & Distribution, our Market share in high-yield cash segment hasbeen improved. Overall market share improved to 2.5% (ex-prop) in Q4FY20. We havewitnessed strong traction in new client addition driven by Franchisee andretail channel , total 2,42,000+ clients acquired in FY20, +72% YoY. Activeclients have also registered 16% YoY growth at 3.94 lacs as of March 2020.

o  Our strategy to bring in linearity through thetrail-based distribution business is showing results. Distribution AUM was Rs 9,034cr as of FY20. With only 16% of the 0.13 crore client base tapped, we expect a continuedincrease in AUM and fee income as number of clients to whom we have cross soldand number of products per client cross sold rises.

o  In InstitutionalBroking, there was substantial improvement in rankings in ASIA MONEY POLL2019 with 2^nd Rank – Best Local Brokerage, 1^st Rank - BestOverall Sales, 1^st Rank – Best Sales Trading, 1^st Rank –Best Corporate Access. This hasbeen the result of focus driven differentiated research products with 250+companies covering 21 sectors.

o  Investment Banking business continues to engage on a wide cross-section ofmandated transactions across capital markets and advisory.   

·      Housing finance business

o   Motilal Oswal Home Finance (MOHFL) reported profit of Rs 39 cr in FY20and Rs 18 cr in Q4FY20.

o  Normalcy restored in profitability in FY20. ExitPPOP/ PBT  at Rs 40 cr / Rs 28 crrespectively

o   Margins have improved to 5.3% in FY20, on account of improvement in yieldand lower cost of funds.

o   Loan book stood at Rs 3,667 cr asof FY20. Disbursements in FY20 were Rs 190 cr. New booksourced from April’18 validates the new credit policy with 3 cases in NPA outof ~5000 loan cases.

o   GNPA at1.8%, NNPA at 1.36% and PCR increased to 66%.

o   CRISIL hasupgraded MOHFL’s rating to AA- (stable outlook) from earlier A+ (stable). Thiswill further benefit MOHFL in bringing down cost of funds and improve spreads.

o  Strong support from parent continues with totalcapital infusion to Rs 850 cr. Net Gearing stands at 3.2x and Tier 1 CARremains robust at 46.4%.

o  Opex has been trending down to 23 cr in Q4FY20, resultingin exit C/I ratio of 37%.

o  Limited borrowing repayment for next 1 year, strongundrawn borrowing lines and ALM places us 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. DuringFY20 we have invested ~Rs 100 cr+ in quoted equity investments.

o  Totalquoted equity investment including unrealised gains was Rs 1,220 cr as of Q4FY20.Cumulative XIRR of these investments is ~9%.

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. Aspire Housing Finance was awarded‘India’s Most Admired & Valuable Housing Finance Company’ at India LeadershipConclave 2015.

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