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Motilal Oswal Financial Services reports Q3FY20 PAT of Rs 165 cr and 9MFY20 PAT of Rs 437 cr, +196% YoY.

Mumbai 22-Jan-2020

Motilal Oswal Financial Services reports Q3FY20 PAT of Rs 165 cr and 9MFY20 PAT ofRs 437 cr, +196% YoY.

Mumbai, January 22, 2020: Motilal Oswal Financial Services Ltd. announced itsresults for the quarter ended and nine month ended December 31, 2019 postapproval by the Board of Directors at a meeting held in Mumbai on January 22,2020.


Performance for the quarterand nine month ended December 31,2019

  • Consolidated revenues stood at Rs 696 cr, +2% YoY in Q3FY20. Consolidated PAT was at Rs 165 cr in Q3FY20 vs Rs 39.6 cr in last year same period. Consolidated revenues for 9MFY20 were at 2024 cr, +3% YoY and consolidated PAT for 9MFY20 was at Rs 437 cr, +196% YoY.  Further, Total comprehensive income for 9MFY20 stood at Rs 509 cr, +240% YoY
  • Some of the highlights for the 9MFY20 include 7% YoY growth in AMC AUM, 8% YoY growth in PE & RE AUM,  15% YoY growth in Wealth AUM, 16% YoY growth in Distribution business AUM, Positive net flows in MF for consecutive quarters amid moderate industry flows, Accelerated pace of new client addition in broking business, Superior quality of new book underwritten, Lower incremental credit cost, higher margins, Rating upgrade from CRISIL for MOHFL to AA- (Stable) from A+ earlier and MOHFL’s NPA pool sale to ARC.
  • Board has declared interim dividend of Rs 4 per share (FV Re 1/share).
  • Consolidated Net Worth stood at Rs 3541 cr and net debt was Rs 4250 cr. Excluding MOHFL, net debt was Rs 1357 and net of investments, we have a net cash balance sheet. RoE for 9M stands at 21%.
  • Besides financial performance, the last nine month has been very eventful in terms of our successes in brand building, advertising and several other fronts. In 9MFY20, MOFSL got inducted in “Hall of Fame” at 10th Financial Advisory Awards 2019. MOFSL rank 2ndBest Local Brokerage” in Asia Money broker’s poll 2019. MOFSL won “Best Data Analytics of the year Award” at the India NBFC excellence Awards 2019 by Synnex. 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 thecompany, Mr. Motilal Oswal, MD & CEO said “Our strategy to diversify our business model towards linear sourcesof earnings continues to show results. Our Asset Management business is likelyto gain from strong product performance. Our Housing finance business is setfor new beginning as all legacy issues are behind with incremental focus onprofitable growth. Each of our 7 businesses offers headroom for growth. Prestigious awards like “Hall of fame”, Best LocalBrokerage of the year and several others have made all associated with thegroup immensely proud”.


Performance of Business Segments for the quarter and nine month ended December 31, 2019

·      Asset Managementbusinesses (AMC, PE and PWM)

o  Asset Management business AUM across MF, PMS &AIF stood at Rs 40,096 cr, +7% YoY. Our AMC ranks 12 by total equity assets; inPMS we maintain leadership position. Revenues and PAT for the quarter stood atRs 144 cr (+5% YoY) and Rs 41 cr (+22% YoY), respectively. 

o  Our Equity MF AUM of Rs 20,967 cr is just 1.9% of the Industry Equity AUMof Rs 10.8 lakh cr. We have seen improvement in performance of severalproducts. Several schemes rank top quartile in performance over 1 year andsince inception. This has resulted in traction in our gross as well as netflows.

o  Further, MOAMC has also launched Large & Mid-Cap fund under activecategory and also launched 4 index funds under passive category.

o  Our share of Alternate assets, comprising of PMS & AIF, is thehighest among AMC’s at ~47%.

o  Private Equity manages assets of Rs 6,556cr (+8% YoY) across 3 growth capital PE funds and 4 real estate funds. In9MFY20, revenues grew by 9% YoY (ex-carry) at Rs 75.6 cr and PAT stood at Rs17.6 cr. The 1st growth fund (IBEF 1) has delivered an XIRR of ~27%.Strong performance and positioning has also aided new fund raise. We havelaunched IREFIV in FY19 and have achieved 3rd close at ~Rs. 1030 cr.

o  Wealth Management business AUM grew by 15% YoYat Rs 18,897 cr in 9MFY20 with net sales of Rs 741 cr. RM count of thisbusiness has reached 134. Our trail revenues predominantly cover our fixedcosts. New MD &CEO has joined us with over 17+ years of experience in Wealth ManagementIndustry. 

o  Overall Asset and Wealth Management revenues were Rs 576cr in 9MFY20 and contributed 28% of consolidated revenues. Profits were Rs 146cr and contributed 33% of consolidated profits.


·      Capital marketsBusinesses (Broking & Investment banking)

o  Capital markets comprises of Retail Broking, Institutional Equities andInvestment Banking business. Revenues for this segment were Rs 897 cr in 9MFY20and contributed ~44% of consolidated revenues. Profits were Rs 138 cr in 9MFY20and contributed ~31% of consolidated PAT. Broking and distribution businessprofit stood at Rs 143 cr in 9MFY20 led by healthy volume growth and betteroperating leverage on the higher and linear revenues.

o  In Retail Broking & Distribution, our Market share inhigh-yield cash segment has been improved. Overall market share improved to2.6% (ex-prop) in Q3FY20.

o  Our strategy to bring inlinearity through the trail-based distribution business is showing results.Distribution AUM was Rs 10,392 cr, +16% YoY in Q3FY20. With only 16% of the 13lakh client base tapped, we expect a continued increase in AUM and fee incomeas number of clients to whom we have cross sold and number of products perclient cross sold rises.

o  In Institutional Broking, there was substantial improvement inrankings in ASIA MONEY POLL 2019 with 2nd Rank – Best Local Brokerage, 1stRank - Best Overall Sales, 1st Rank – Best Sales Trading, 1stRank – Best Corporate Access. This has been the result of focus driven differentiated research productswith 250+ companies covering 21 sectors.

o  Investment Banking business ccontinues to engageon a wide cross-section of mandated transactions across capital markets andadvisory.  


·      Housing financebusiness

o   MotilalOswal Home Finance (MOHFL) reported profit of Rs 21.4 cr in 9MFY20 and Rs 16.1cr in Q3FY20.

o  Margins have improved to 5.2% in 9MFY20, on accountof improvement in yield and lower cost of funds.

o  Loan book stood at Rs 3,779 cr as of 9MFY20. Disbursements in 9MFY20 wereRs 146 cr. New book sourced from April’18 validates the new credit policy with 11cases in NPA out of ~4500 loan cases.

o  CRISIL has upgraded MOHFL’s rating to AA- (stable outlook) from earlierA+ (stable). This will further benefit MOHFL in bringing down cost of funds andimprove spreads.

o  Strong support from parent continues with total capital infusion to Rs850 cr. Net Gearing stands at 3.4x.

o  Limited borrowing repayment for next 1 year, strong undrawn borrowinglines and ALM places us in comfortable liquidity situation.


·     Fund basedinvestments includes sponsor commitments to our AMC & PE fundsand strategic equity investments.

o  Fund based investments like commitmentsto our asset management products. During 9MFY20 we have invested ~Rs 100 cr+ inquoted equity investments.

o  Total quoted equity investment including MTM gains was Rs 1,660 cr as ofQ3FY20. Cumulative XIRR of these investments is ~18%.

About Motilal OswalFinancial Services Limited

MotilalOswal Financial Services Ltd.  (MOFSL) isa diversified financial services company. Its offerings include capital marketsbusinesses (Retail broking, Institutional broking & Investment banking),Asset & Wealth Management (Asset Management, Private Equity & WealthManagement), Housing Finance & Equity based treasury investments.

MOFSL’score purpose is to be well respected and preferred global financial servicesorganization enabling wealth creation for customers. Research is the solidfoundation and the investment advisory at Motilal Oswal Financial Services isbased on the research. MOFSL’s research has received wide media coverage andconsistently won awards, showcasing company''s strong research capabilities.This includes being awarded ''''Best Performing National Financial Advisor -Equity Broker'''''''' for six years at the UTI-CNBC TV18 Financial Advisor Awards,Moneycontrol Wealth Creator Award –Best Broking Business Of The Year-2018. MOFSL won “Broking House of the year” at MCX awards2019.

Thecompany has diversified client base of ~1.3 million. MOFSL’s core purpose is tobe a respected and preferred global financial services organization enablingwealth creation for its customers.

Webwww.motilaloswal.com  |twitter: @MotilalOswalLtd | Facebook: https://www.facebook.com/MotilalOswalSecurities/

For any query please contact:

Rohini Kute, Head – CorporateCommunication, Motilal Oswal Financial Services Ltd

Ph - +91-22-7199 2340 I Mob- +91-9820196838