Motilal Oswal Financial Services Limited · NSE:MOTILALOFS
Motilal Oswal Financial Services — Q1 FY2020 Earnings Presentation
41 slides from Motilal Oswal Financial Services's earnings presentation, Jul 31, 2019
Slide 1: Cover letter to stock exchanges
MOTILAL 0SWAL Motilal Oswal Financial Services Limited CIN: L67190MH2005PLC153397 Regd. Off.: Motilal Oswal Tower. Rahimtullah Sayani Road, Opp. Pare! ST Depot, Prabhadevi, Mumbai - 400025 Board: +91 22 7193 4200 / 4263 Fax: +91 22 5036 2365 July 31, 2019 BSE Limited National Stock Exchange of India
Slide 2: Earnings Presentation Q1FY20
Motilal Oswal Financial Services Ltd Earnings Presentation | Q1FY20 Businesses building scale Annuity revenue driving visibility All biz offer huge headroom for growth
Slide 3: Key Highlights, Financials, Businesses, MOFSL Journey
Key Highlights Pg 3 -5 Financials Pg 6 - 11 Businesses Pg 12 - 38 MOFSL Journey Pg 39
Slide 4: Diversified business model
#'" EXPe,,,. Diversified business model [�]-M__o _T L_AI__L O_s_w_A_L_ YEARS Fund based Asset Management Capital Markets Housing Finance Investments AMC AUM: Rs 388 bn, Changed the name to Total quoted equity +3% YoY; EBITDA Stable revenue and “Motilal Oswal Home profit for Broking investment includ
Slide 5: Business-wise RoE mix
#'" EXPe,,,. Business-wise RoE mix [�]-M__o _T L_AI__L O_s_w_A_L_ YEARS Group RoE Segment-wise RoE, with % of net worth employed (NWE) MOFSL Asset & Wealth Capital Housing Fund based Consolidated Management Finance investments Markets 20% in Q1FY20 98% in Q1FY20 8% in Q1FY20 14% in Q1FY20 61% in Q1F
Slide 6: Awards & Accolades
Awards & Accolades MOFSL wins Best 360 MOFSL gets inducted in the Degree Marketing MOFSL Wins Broking Hall of Fame at the 10th Campaign at Masters of House of the year (West) at Financial Advisory Awards Modern Marketing MCX Awards 2019 2019. Conference and Awards Aspire Home Finance awarded “ Digit
Slide 7: Consolidated financials – Revenue mix
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V Consolidated financials – Revenue mix ]J ]_M__O _ T l Particulars (Rs mn) Q1FY20 Q1FY19 YoY (%) Q4FY19 QoQ (%) Asset Management 1,443 1,482 -3% 1,396 3% Wealth Management 221 261 -15% 258 -14% Private Equity 240 193 24% 320 -25% Broking 2,778 2,885 -4% 2,809
Slide 8: Consolidated financials – PAT Mix
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V Consolidated financials – PAT Mix ]J ]_M__O _ T l PAT (Rs Mn) Q1FY20 Q1FY19 YoY (%) Q4FY19 QoQ (%) Asset Management 348 403 -14% 335 4% Private Equity 50 43 15% 77 -35% Wealth Management 5 27 -81% 29 -82% Asset & Wealth 403 474 -15% 441 -9% Broking 392 511 -2
Slide 9: Consolidated balance sheet
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V Consolidated balance sheet ]J ]_M__O _ T l Particulars (Rs bn) Q1FY20 FY19 Sources of Funds Networth 32.3 30.5 Loan Funds 47.8 51.6 Minority Interest 0.4 0.4 Deferred tax liability 0.0 0.0 Total Liabilities 80.6 82.5 Application of Funds Fixed assets (net blo
Slide 10: Financial performance
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V Financial performance ]J ]_M__O _ T l Revenue trend Profitability trend CAGR: 36% 29 43 27 CAGR: 20% 19 25 20 11 12 7 6.5 9 7 1.7 3.6 6.3 3.0 1.0 1.3 FY16 FY17 FY18 FY19 Q1FY19 Q1FY20 FY16 FY17 FY18 FY19 Q1FY19 Q1FY20 PAT (Rs bn) EPS (Rs) Revenues (Rs bn) Pro
Slide 11: Businesses building scale
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V Businesses building scale ]J ]_M__O _ T l AMC AUM growth trend Wealth AUM growth trend (Rs bn) 389 388 (Rs bn) 355 AUM CAGR: 59% AUM CAGR: 43% 203 105 61 42 64 101 147 175 180 FY15 FY16 FY17 FY18 FY19 Q1FY20 FY15 FY16 FY17 FY18 FY19 Q1FY20 DP AUM growth trend
Slide 12: Financial performance – growth drivers by business
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V Financial performance ]J ]_M__O _ T l Asset Management: Strong operating leverage Broking & Distribution: Margins led by Distribution • AMC revenue and profit for Q1FY20 remains sequentially • B&D revenue and profit remains stable sequentially. stable at Rs 1
Slide 13: Asset Management
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V ASSET MANAGEMENT ]J ]_M__O _ T l AMC AUM Particulars (Rs mn) Q1FY20 Q1FY19 YoY (%) Q4FY19 QoQ (%) Rs 388 bn in AUM (bn) 388 376 3% 389 0% FY19, Total Revenues 1,443 1,479 -2% 1,396 3% +3% YoY Distribution Costs 612 620 -1% 619 -1% Other Costs 266 234 14% 245
Slide 14: Asset Management
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V Asset Management ]J ]_M__O _ T l ● Market share in MF Equity AUM remain stable at 1.9% (including balance) in Q1FY20. The overall industry witnessed a fall in equity flows owing to volatile equity market conditions. ● PMS continued to have a positive net infl
Slide 15: Asset Management – Potential levers to scale business
� [� Asset Management – Potential levers to scale business YEARS MOTILAL OswAL MOAMC’s has “Zero” share in FII driven domestic equity market which is 1.6x of size of DII. MOAMC AUM breakup and growth trend Market cap ( Rs 151 tn) proportion (Rs bn) Total market 388 CAGR: 59% 389 376 Cap of 355 Insti
Slide 16: Asset Management – Potential levers to scale profitability
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V ]J ]_M__O _ T l Asset Management – Potential levers to scale profitability MOMF Sourcing Mix on the basis of AUM MOAMC profitability trend 12% 11% 8% 7% 6% 7% PAT CAGR:2.3x 23% 14% 15% 13% 15% 17% 17% 13% 18% 16% 17% 23% 19% 13% 20% 35% 36% 37% 32% 42% 38% 51
Slide 17: Asset Management – Granularity of MF AUM
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V Asset Management – Granularity of MF AUM ]J ]_M__O _ T l MOMF SIP AUM and inflows market share MOMF rising SIP proportion 1.4% 1.4% 27.0% 1.3% 26.1% 1.3% 24.9% 1.3% 23.8% 23.5% 24.1% 23.1% 22.9% 22.7% 22.3% 1.3% 20.0% 1.3% 1.3% 1.3% 17.4% 15.5% 13.3% 13.9% 12
Slide 18: Asset Management – Stickiness of MF flows to continue
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V Asset Management – Stickiness of MF flows to continue.. ]J ]_M__O _ T l Rising Industry’s MF Equity AUM Rising share of Direct proportion (Rs bn) 10,207 10,423 55% 57% 9,055 50% 8,667 47% 44% 5,859 42% 41% 41% 38% 4,060 34% 3,583 16% 18% 15% 15% 1,995 11% FY1
Slide 19: Private Equity – Strong growth in AUM
#'" w,.,, PRIVATE EQUITY – Strong growth in AUM [�]l]_M__O _T l L_A__ L O_S_W_A_L_ ' YEARS Particulars (Rs mn) Q1FY20 Q1FY19 YoY (%) Q4FY19 QoQ (%) Total AUM of PE Total Revenues 240 193 24% 320 -25% business stands at ~ Rs 64 bn , +25% YoY Operating Cost 142 120 18% 180 -22% EBITDA 99 73 34% 140 -3
Slide 20: Private Equity – Exits from funds provides strong visibility
Private Equity – Exits from 7 funds provides strong visibility over [� �� MOTILAL OSWAL next decade YEARS Launch period of PE Funds QGLP investments delivering higher IRR 61% 500 480 450 400 400 400 400 IREF IV 37% 33% Rs 12 29% 30% IBEF III 26% bn 200 Rs 23 IREF III bn 13% IREF II (Rs 10.3 12% IBEF
Slide 21: Wealth Management
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V ]J ]_M__O _ T l WEALTH MANAGEMENT Wealth AUM Particulars (Rs mn) Q1FY20 Q1FY19 YoY (%) Q4FY19 QoQ (%) Rs 180 bn in FY19, AUM (bn) 180 147 22% 175 3% +18% YoY Net adds (bn) 5 10 -54% 2 90% Total Revenues 221 261 -15% 258 -14% Operating Cost 211 220 -4% 211 0%
Slide 22: Wealth Management
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V ]J ]_M__O _ T l Wealth Management Wealth AUM growth trend Wealth net sales trajectory (Rs bn) 126 126 130 (Rs bn) 26.6 118 23.6 77 78 17.8 14.7 49 11.1 9.9 4.6 42 64 101 147 175 153 180 FY15 FY16 FY17 FY18 FY19 Q1FY19 Q1FY20 FY15 FY16 FY17 FY18 FY19 Q1FY19 Q1
Slide 23: Broking & Distribution
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V BROKING & DISTRIBUTION ]J ]_M__O _ T l Particulars (Rs mn) Q1FY20 Q1FY19 YoY (%) Q4FY19 QoQ (%) Healthy volume growth; Total Revenues 2,778 2,885 -4% 2,809 -1% improvement in Operating Costs 1,811 1,806 0% 1,927 -6% high-yield cash segment EBITDA 967 1,079 -1
Slide 24: Broking & Distribution
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V Broking & Distribution ]J ]_M__O _ T l Distribution penetration (% of total client base of 1.2 mn) Retail Broking & Distribution 16.3% 16.2% ● Traction in new client addition driven by Franchisee and retail channel i.e. 15% 14% ~31,000 clients in Q1FY20. ● Al
Slide 25: Broking & Distribution – Strong growth in Volume & Distribution AUM
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V Broking & Distribution – Strong growth in Volume & Distribution AUM ]J ]_M__O _ T l DP AUM growth trend Rising Distribution AUM (Rs bn) 607 611 (Rs bn) 590 580 CAGR: 27% 96 97 83 450 75 44 256 227 35 15 18 16 17 5 7 2 2 FY15 FY16 FY17 FY18 FY19 Q1FY19 Q1FY20
Slide 26: Broking & Distribution – Potential levers
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V Broking & Distribution – Potential levers ]J ]_M__O _ T l Corporate profit to GDP trend Market cap to GDP trend (%) Decade average : 5.1% (%) 7.8 103 7.3 95 6.5 88 6.2 6.2 82 83 81 83 79 79 5.4 5.5 71 69 4.9 4.6 64 66 4.7 4.3 55 3.8 52 3.4 42 3.0 3.1 2.9 2.6
Slide 27: Investment Banking
"'��;!:'�.o, [�l�M�- o - I _L_O�w T L_A s �L- A INVESTMENT BANKING YEARS Particulars (Rs mn) Q1FY20 Q1FY19 YoY (%) Q4FY19 QoQ (%) FY19 Total Revenues 3 151 -98% 146 -98% Operating Costs 56 57 -3% 72 -23% A.Jrangaba:J Boctrtcals Ltd EBITDA -53 94 - 74 M&A Advisory – Rs 8.3 bn PBT -56 92 - 70 )I� HAPP
Slide 28: Motilal Oswal Home Finance
MOTILAL OSWAL HOME FINANCE MOTILAL 0SWAL HOME LOANS Particulars (Rs mn) Q1FY20 Q1FY19 YoY (%) Q4FY19 QoQ% Net Interest Income (NII) 578 576 0% 513 13% Name change to ‘Motilal Oswal Home Other Operating Income 22 33 -34% 39 -45% Finance’ Total Income 599 609 -2% 553 8% Operating Cost 239 267 -10% 237
Slide 29: Motilal Oswal Home Finance – ECL provisioning details
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V Motilal Oswal Home Finance ]J ]_M__O _ T l ECL provisioning details Particulars (Rs mn) Q1FY20 Stage 1 & 2 38,569 % portfolio in stage 1 & 2 89.64% Stage 3 4,424 % portfolio in Stage 3 10.36% ECL Provision % Stage 1 & 2 2.00% Total Assets 42,701 ECL Provision
Slide 30: Motilal Oswal Home Finance – Loan book and disbursement trend
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V Motilal Oswal Home Finance ]J ]_M__O _ T l Loan book and disbursement trend (Rs bn) ● Positive trends in New loans sourced from April’18 o Bounce rate has substantially reduced to 8.5% in new book. 24.0 49 o In new book, ~82% of disbursement was in <Rs 1.5mn
Slide 31: Motilal Oswal Home Finance
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V Motilal Oswal Home Finance ]J ]_M__O _ T l ● Average ticket size is Rs 0.85 mn, with loans extended to more than Low gearing ~52,000 families, as MOHFL is focused on the affordable housing 6.4 segment with no exposure to LAP and builder finance. 5.1 5.0 5.0 ●
Slide 32: Motilal Oswal Home Finance – Strong liability management
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V Motilal Oswal Home Finance – Strong liability management ]J ]_M__O _ T l Liability Mix based on rates (%) Average tenor of outstanding borrowing (months) 59 52 50 48 49 31 26 45 45 42 53 50 51 58 69 74 50 55 49 42 47 FY15 FY16 FY17 FY18 FY19 Q1FY19 Q1FY20 FY1
Slide 33: Motilal Oswal Home Finance – Geographical diversification
���� ElPr.,,a. [� ]_M__ Motilal Oswal Home Finance – Geographical diversification o _ T L_AI__ L O_ s A-L--. .- v YEARS State wise disbursement – Rising new state contribution in Q1FY20 73% Incremental contribution from new 12% 12% state leads to lower 55% concentration risk 10% 46% 8% 8% 8% 42% 6%
Slide 34: Motilal Oswal Home Finance
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V Motilal Oswal Home Finance ]J ]_M__O _ T l Higher investment in manpower Traction in Login to sanction ratio 1,273 1,267 1,281 1,174 78% 1,051 70% 67% 67% 63% 63% 62% 60% 57% 54% 54% 496 120 120 120 44% 45% 46% 113 113 41% 41% 38% 25% 36% 35% 34% 36% 36% 31%
Slide 35: Motilal Oswal Home Finance – Asset quality trend
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V Motilal Oswal Home Finance – Asset quality trend ]J ]_M__O _ T l Net Slippages (rise in Q1FY20 due to seasonality nature of the book) Traction in recoveries (Rs mn) (Rs mn) 400 1,200 1,000 330 900 870 740 690 210 200 150 440 420 130 100 90 160 20 Q1FY18 Q2FY1
Slide 36: Motilal Oswal Home Finance – Pursuing high quality growth
Motilal Oswal Home Finance [j] Mm1LAL OswAL Rich understanding from 60,000 live accounts ------- . .. .... ........ Focus on Self employed / Self-construction / small ticket loans .... No builder loans ...... -, '' 100% In-house loan sourcing '' '' '' Risk based pricing to ensure quality sourcing ''
Slide 37: Fund Based Investments
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V FUND BASED INVESTMENTS ]J ]_M__O _ T l Particulars (Rs mn) Q1FY20 Q1FY19 YoY (%) Q4FY19 QoQ (%) Total quoted equity investment including Total Revenues 339 69 389% 535 -37% MTM gains was Rs 16.1 bn as of PAT 350 89 292% 491 -29% Q1FY20. Note: Fund based reven
Slide 38: Fund Based investments – Skin in the game
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V Fund Based investments – Skin in the game ]J ]_M__O _ T l Skin in the game in AMC Skin in the game in PE 3.8 26 388 64 AMC AUM (Rs bn) Sponsor & Promoter AUM in AMC (Rs bn) PE AUM (Rs bn) Sponsor Commitment in PE (Rs bn) Unrealised gain from quoted equity inv
Slide 39: MOFSL Journey – 32 Years of Wealth Creation
#t��� [�]-----=M=O-T-- 1 A_L_O L �W S �L--, A MOFSL Journey YEARS - Asset Management AUM crossed $ 6 bn -Wealth & distribution assets combined - Reach expands to touches $.3 bn 2017 - Asset - Forbes super 2003 2010 over 100 business -Aspire Home finance Management 50 companies locations and name cha
Slide 40: Safe Harbour
#�'.!.�E.f� [�YEARS L_A__ L O_S_\-A_L_ V Safe Harbour ]J ]_M__O _ T l This earning presentation may contain certain words or phrases that are forward - looking statements. These forward-looking statements are tentative, based on current analysis and anticipation of the management of MOFSL. Actual re
Slide 41: For any query, please contact
For any query, please contact : Shalibhadra Shah Chief Financial Officer 91-22-71934917 / 9819060032 shalibhadrashah@motilaloswal.com Rakesh Shinde VP–Investor Relations 91-22-71985510 / 9920309311 rakesh.shinde@motilaloswal.com
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