Motilal Oswal Financial Services Limited · NSE:MOTILALOFS
Motilal Oswal Financial Services — Q2 FY20 Earnings Presentation
42 slides from Motilal Oswal Financial Services's earnings presentation, Oct 24, 2019
Slide 1: Cover letter to exchanges: Investor/Analyst Presentation Q2 FY2019-20
MoTILAL OswAL Motilal Oswal Financial Services Limited C I N : L67190MH2005PLC1 53397 Regd. Off.: Motilal Oswal Tower, Rahimtullah Sayani Road, Opp. Parel ST Depot. Prabhadevi, Mumbai - 400025 October 24, 2019 Board: +91 22 7 1 9 3 4200 / 4263 . al S .Fa,x: +�1 22 5036 23.65L. . d BSE Limited N atio
Slide 2: Earnings Presentation | Q2FY20 and H1FY20
Motilal Oswal Financial Services Ltd Earnings Presentation | Q2FY20 and H1FY20 BUSINESSES BUILDING SCALE ANNUITY REVENUE DRIVING VISIBILITY ALL BIZ OFFER HUGE HEADROOM FOR GROWTH
Slide 3: Key Highlights, Financials, Businesses
Page 3-5 Key Highlights Page 6-11 Financials Page 12-38 Businesses
Slide 4: Diversified business model
#''� EXP4>1. �]S ,- ' �-=-o-T-,L_A_L_O_sw Diversified business model [ - A-, L YEARS Motilal Oswal Financial Services FUND BASED ASSET MANAGEMENT CAPITAL MARKETS HOUSING FINANCE INVESTMENTS Significant Share in high yielding NPA book sale to ARC Total quoted equity improvement in cash segmen
Slide 5: Business-wise RoE mix
#''� EXP4>1. �]S ,- ' �-=-o-T-,L_A_L_O_sw Business-wise RoE mix [ - A-, L YEARS Group RoE Segment-wise RoE, with % of net worth employed (NWE) Asset & Wealth Capital Fund based MOFSL Housing Finance Management Markets investments 1% in H1FY20 Consolidated 108% in H1FY20 66% in H1FY20 11% in H1FY20 1
Slide 6: Awards & Accolades
Awards & Accolades i{,i) O T I L A L OswAL Motilal Oswal wins Gold MOPWM wins Best MOFSL gets inducted in Marketing Team of the Boutique Wealth Manager the HALL OF FAME at the Year & Grand Prix India for 2nd consecutive 10th Financial Advisor Marketing Campaign of year by The Asset Triple A Awards t
Slide 7: Consolidated financials – Revenue mix
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L Consolidated financials – Revenue mix [ YEARS Particulars (Rs mn) Q2FY20 Q2FY19 YoY (%) Q1FY20 QoQ (%) H1FY20 H1FY19 YoY (%) Broking 3,019 2,939 3% 2,778 9% 5,797 5,824 0% Investment Banking 83 34 142% 3 - 86 185 -54% Asset Management 1,36
Slide 8: Consolidated financials – PAT Mix
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L Consolidated financials – PAT Mix [ YEARS PAT (Rs mn) Q2FY20 Q2FY19 YoY (%) Q1FY20 QoQ (%) H1FY20 H1FY19 YoY (%) Broking 561 515 9% 401 40% 962 1,039 -7% Investment Banking 10 -16 - -39 - -29 49 - Capital Markets 571 499 14% 362 58% 933 1,
Slide 9: Consolidated balance sheet
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L Consolidated balance sheet [ YEARS Particulars (Rs bn) H1FY20 FY19 Sources of Funds Net-worth 33.1 30.5 Borrowings (1) 47.2 51.6 Minority Interest 0.3 0.4 Total Liabilities 80.6 82.5 Application of Funds Fixed assets (net block) 3.3 3.0 In
Slide 10: Financial performance
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L Financial performance [ YEARS Revenue trend Profitability trend CAGR: 36% Revenues (Rs bn) CAGR: 20% PAT (Rs bn) 29.0 EPS (Rs) 27.0 43 19.3 25 12.9 13.3 20 19 10.9 12 7 1.7 3.6 6.3 3.0 1.1 2.7 FY16 FY17 FY18 FY19 H1FY19 H1FY20 FY16 FY17 FY
Slide 11: Businesses building scale
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L Businesses building scale [ YEARS AMC AUM growth trend (Rs bn) Wealth AUM growth trend (Rs bn) 181 AUM 175 389 385 356 364 155 AUM CAGR: 43% 147 CAGR: 59% 101 203 64 105 42 61 FY15 FY16 FY17 FY18 FY19 H1FY19 H1FY20 FY15 FY16 FY17 FY18 FY19
Slide 12: Growth drivers by business
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L Financial performance [ YEARS GROWTH DRIVERS ASSET MANAGEMENT WEALTH MANAGEMENT BROKING & DISTRIBUTION HOUSING FINANCE Strong traction in AUM grew 17% YoY to B&D continues to show Rs 181 bn with net NPA book sale to ARC product per
Slide 13: Asset Management
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L ASSET MANAGEMENT [ YEARS Particulars (Rs mn) Q2FY20 Q2FY19 YoY (%) Q1FY20 QoQ (%) H1FY20 H1FY19 YoY (%) AMC AUM AUM (bn) 385 364 6% 388 -1% 385 364 6% Rs 385 bn in H1FY20, Total Revenues 1,364 1,540 -11% 1,443 -5% 2,807 3,022 -7% +6% YoY -
Slide 14: Asset Management
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L Asset Management [ YEARS SIP inflows in H1FY20 continued to remain stable at Rs 8.4 bn. Our average SIP ticket size is ~Rs 4,000 per month is higher than the industry average of Rs 2,900 per month. Our SIP market share and proportion to
Slide 15: Asset Management – New fund launches
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L Asset Management – New fund launches [ YEARS We have recently launched 4 index funds which are India’s 1st of its kind retail focused passive funds. We have launched MO-Nifty 500, MO- Nifty Bank, MO-Nifty Mid-Cap 150, MO-Nifty Small-Cap
Slide 16: Asset Management – Potential levers to scale business
Asset Management – Potential levers to scale business 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 (Rs bn) Total market Cap Market cap (Rs151tn) proportion MF AUM PMS AUM AIF AUM of Institutional D D D D 364 385 DII Pr
Slide 17: Asset Management – Potential levers to scale profitability
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L Asset Management – Potential levers to scale profitability [ YEARS MOMF Sourcing Mix on the basis of AUM MOAMC profitability trend IFAs Direct NDs Wealth Captive PAT (Rs mn) PAT PAT to AAUM 12% 11% 8% 7% 7% 7% CAGR:2.3x 23% 0.44% 14% 14% 1
Slide 18: Asset Management – Granularity of MF AUM
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L Asset Management – Granularity of MF AUM [ YEARS MOMF SIP AUM and inflows market share MOMF rising SIP proportion MO MF SIP % of MOMF inflows MO MF SIP AUM Market share Industry SIP AUM as % of Ind Eq MF AUM MOMF SIP AUM as % Eq MF AUM 1.4
Slide 19: Asset Management – Stickiness of MF flows to continue
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L Asset Management – Stickiness of MF flows to continue.. [ YEARS Rising Industry’s MF Equity AUM (Rs bn) Rising share of Direct proportion Direct Share (As a % of total AUM) Direct Share (As a % of Debt AUM) 10,207 10,320 9,245 Direct Share
Slide 20: Private Equity & Real Estate
#'" "'e,, �]r]�M-0-1-- -1 L_A_L_O_S_ W'_A_L_ PRIVATE EQUITY & REAL ESTATE [ YEARS Particulars (Rs mn) Q2FY20 Q2FY19 YoY (%) Q1FY20 QoQ (%) H1FY20 H1FY19 YoY (%) PE and RE AUM stood at Total Revenues 255 264 -3% 240 6% 495 457 8% Rs 66 bn, +8% YoY in Operating Cost 159 148 8% 142 12% 300 267 12% H1FY
Slide 21: PE & RE – Exits from funds provides strong visibility
�t PE & RE– Exits from 7 funds provides strong visibility over next decade [ Jlfu MOTILAL 0SWAL YEARS Launch period of PE Funds QGLP investments delivering higher IRR Investment Amt(Rs Mn) IRR (%) 61% 500 480 IREF IV 450 Rs 12 bn 400 400 400 400 IBEF III IREF III Rs 23 bn 37% IREF II 33% (Rs 10.3 29
Slide 22: Wealth Management
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L WEALTH MANAGEMENT [ YEARS Particulars (Rs mn) Q2FY20 Q2FY19 YoY (%) Q1FY20 QoQ (%) H1FY20 H1FY19 YoY (%) Wealth AUM AUM (bn) 181 155 17% 180 1% 181 155 17% Rs 181 bn in, Total Revenues 279 319 -13% 221 26% 500 581 -14% +17% YoY in H1FY20 O
Slide 23: Wealth Management
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L Wealth Management [ YEARS Wealth AUM growth trend Wealth net sales trajectory WM AUM (Rs bn) WM Sales RM WM net Sales (Rs bn) 135 26.6 126 129 118 23.6 17.8 77 78 16.1 14.7 49 11.1 6.1 42 64 101 147 175 155 181 FY15 FY16 FY17 FY18 FY19 H1F
Slide 24: Broking & Distribution
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L BROKING & DISTRIBUTION [ YEARS Healthy volume Particulars (Rs mn) Q2FY20 Q2FY19 YoY (%) Q1FY20 QoQ (%) H1FY20 H1FY19 YoY (%) growth; improvement Total Revenues 3,019 2,939 3% 2,778 9% 5,797 5,824 0% in high-yield cash Operating Costs 1,945
Slide 25: Broking & Distribution
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L Broking & Distribution [ YEARS Retail Broking & Distribution Distribution penetration (% of total client base of 1.26 mn) Traction in new client addition driven by Franchisee and retail Retail Distribution Penetration to Total clients(%)
Slide 26: Broking & Distribution – Strong growth in Volume & Distribution AUM
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L Broking & Distribution – Strong growth in Volume & Distribution AUM [ YEARS DP AUM growth trend (Rs bn) Rising Distribution AUM Distribution AUM (Rs bn) Distribution Net Sales (Rs bn) CAGR: 27% 607 590 601 560 35 96 99 450 85 75 227 256 44
Slide 27: Broking & Distribution – Potential levers
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L Broking & Distribution – Potential levers [ YEARS Corporate profit to GDP trend (%) Market cap to GDP trend (%) 103 7.8 95 7.3 88 6.5 6.2 82 83 81 83 6.2 79 79 5.4 5.5 71 69 64 66 4.7 4.9 4.6 4.3 52 55 3.8 3.4 42 3.0 3.1 2.9 2.6 23 FY03 FY
Slide 28: Investment Banking
��:'!:�� INVESTMENT BANKING [ � -----i ] 1 M ro_T _ _ l L _ AL _ O_s _ W_A _,L YEARS MARQUEE DEALS Particulars (Rs mn) Q2FY20 Q2FY19 YoY (%) Q1FY20 QoQ (%) H1FY20 H1FY19 YoY (%) Total Revenues 83 34 142% 3 - 86 185 -54% .i HDFC Operating Costs 59 54 8% 56 5% 114 112 2% EBITDA 24 -20 - -53 -28 74 - Q
Slide 29: Home Finance
HOME FINANCE MOTILAL 0SWAL HOME LOANS Post ARC sale NPA Particulars (Rs mn) Q2FY20 Q2FY19 YoY (%) Q1FY20 QoQ% H1FY20 H1FY19 YoY% declined to 1.8% in Net Interest Income (NII) 542 700 -23% 578 -6% 1,119 1,276 -12% Q2FY20; Healthy PCR of Other Operating Income 23 26 -11% 22 6% 45 59 -24% 62% Total Inc
Slide 30: Home Finance – Asset quality trend
#�'!��� , _ Home Finance – Asset quality trend [ �] MoTILAL OswAL YEARS ECL Provisioning details MOHFL’s GNPA and NNPA trend Particulars (Rs mn) Q2FY20 GNPA NNPA PCR 10.4% Stage 1 & 2 37,738 62% 9.3% % portfolio in stage 1 & 2 97.61% 8.7% 7.8% Stage 3 917 6.8% 7.0% 7.2% 6.9% % portfolio in Stage 3 2
Slide 31: Home Finance
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L Home Finance [ YEARS Fruition of revival efforts visible with positive trends in new loans Loan book and disbursement trend sourced from April’18 Loan Book (Rs bn) Disbursement (Rs bn) Only 6 cases in delinquent pool out of ~4000 cases
Slide 32: Home Finance
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L Home Finance [ YEARS Average ticket size is Rs 0.85 mn, with loans extended to more than Low gearing ~48,000 families, as MOHFL is focused on the affordable housing Leverage (x) segment with no exposure to builder finance. 6.4 Capital
Slide 33: Home Finance – Strong liability management
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L Home Finance – Strong liability management [ YEARS Liability mix based on rates (%) Average tenor of outstanding borrowing (months) Floating Rate Liabilities (%) Fixed Rate Liabilities (%) Average Tenure of Outstanding Borrowings (months)
Slide 34: Home Finance – Geographical diversification
Home Finance – Geographical diversification State wise disbursement – Rising new state contribution in H1FY20 FY17 FY18 FY19 H1FY20 FY17 FY18 FY19 H1FY20 Incremental 73% contribution from new state leads to lower 12% 55% concentration risk 11% 10% 46% 8% 40% 8% 8% 8% 6% 7% 7% 15% 13% 14% 3% 3% 3% 3%
Slide 35: Home Finance
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L Home Finance [ YEARS Higher investment in manpower Traction in Login to sanction ratio Branch Employees Sanction to logins Disbursements to sanctions 78% 1,342 70% 67% 71% 1,273 1,250 67% 1,174 63% 62% 1,051 57% 60% 54% 59% 70% 47% 51% 45%
Slide 36: Home Finance – Key Initiatives
#�'� EXP4! Home Finance � [ YEARS &)o TI L A L - - OswAL • KEY INITIATIVES Sales: 1. Better customer understanding at origination through Real Time Bureau Interface 2. MO Bond Channel to increase connector penetration 3. MOHFL Franchise Channel to leverage change in Brand 4. New Product Launch – Loa
Slide 37: Home Finance – Pursuing high quality growth
��'!�f4>� �_ ] ' M_o_T _ IL _ A _ L _ O_S \ - V A_L ....., Home Finance [ YEARS 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 Pursuing Created in-
Slide 38: Fund Based Investments
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L FUND BASED INVESTMENTS [ YEARS Total quoted equity Particulars (Rs mn) Q2FY20 Q2FY19 YoY (%) Q1FY20 QoQ (%) H1FY20 H1FY19 YoY (%) investment including MTM gains was Rs 15.5 Total Revenues 270 -579 - 339 -18% 609 -510 - bn as of H1FY20. PAT
Slide 39: Fund Based investments – Skin in the game
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L Fund Based investments – Skin in the game [ YEARS Skin in the game in AMC Skin in the game in PE AMC AUM (Rs bn) Sponsor & Promoter AUM in AMC (Rs bn) PE AUM (Rs bn) Sponsor Commitment in PE (Rs bn) 4.9 25 385 66 Unrealised gain from quote
Slide 40: MOFSL Journey
�,,, E.to t.p /: MOFSL Journey I [ J..- �-=- 0-T- Ll-A-L_O_S _ W_A --, L YEARS - As s et Management AUM cros sed $ 6 bn -Wea lth & distribution a s sets combined - Rea ch expands to touches $.3 bn - As s et 2017 - Forbes super 50 -As pire Home finance 2003 over 100 bus iness 2010 Ma na gement compa
Slide 41: Safe Harbour
��,,1 EX.ot.,.1; �]J]_ ' M_O_l-_ _I L_AL _ 0_ _ SW_ A..... L Safe Harbour [ YEARS 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 MOFS
Slide 42: 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
Motilal Oswal Financial Services — Q2 FY20 Earnings Presentation on 6ix