3. Focus: Building 4 engines of ROE growth
Strategy
Performance
Industry
4. Pre-2007
vintage
Since
2007
Since
2014
Transforming the business model to build 4 engines of ROE growth
Capital Market Asset & Wealth Housing Finance Fund Based Milestones achieved
• Research & advice was USP
• PAT up 10X in FY03-08 cycle
• 3x growth in market share
• 10x growth in client base
• Diversification around core
• Investment phase
• Stable margins & profitability
• Used minimal capital, but
sizable net worth still needed
• Low RoE
• New MFs on QGLP philosophy
• Mortgage & Asset biz are
poised for scale
• PE established track record
• Broking & AMC have huge
scope for operating leverage
• Free cash flows deployed to
generate 20%+ ROE avenues
Asset Management
(PMS)
Retail Broking &
Distribution
Institutional
Equities
Private Wealth
Management
Investment Banking
(Advisory)
Private Equity
(Growth Capital)
Private Equity
(Real Estate)
Aspire Home
Finance
(Affordable
Housing Finance)
Investment Banking
(Equity Capital
Markets)
Asset Management
(Mutual Funds) Sponsor
Commitments
(to own MF & PE
funds)Asset Management
(Offshore)
4
5. 5
FY2013-14: ~Rs 12 billion net worth
Rs 1-2 billion in capital market business: earned 30%+ ROE
Rs 3 billion in Corp. office had intangible benefits of synergy
Rs 5 billion in LAS: yielded ~9-10% returns post tax/interm
Rs 2-3 billion in arbitrage: ~7-8% returns post tax/interm.
This allocation earned sub-10% ROE at best
9MFY2017: ~Rs 17 billion net worth
Allocation to capital market business & corp. office continues
LAS to be run as spread biz; arbitrage book also closed down
Rs 5 billion in affordable home finance, which can increase
Rs 9 billion in our MF & PE funds: Shows our own conviction
This allocation is geared for a sustainable 20%+ ROE
How the capital allocation has changed after the transformation
6. Where we stood as of 9MFY17
● Quarterly revenue is at a high
since last 3 successive quarters
● All biz contributed in 9MFY17, led
by HFC (up 212% YoY) & AMC (up
54% YoY). Capital Mkt was up 33%
YoY & Fund based was up 15% YoY
● Share of Capital Mkt was ~41%
vs ~51% in 9MFY16, AMC ~19%
vs ~20% & HFC ~31% vs ~17%
● Quarterly profits is at a high since
last 3 successive quarters
● 9MFY17 PAT driven by Capital Mkt
(up 264%), HFC (up 82% YoY), Asset
& Wealth (up 43% YoY). Capital Mkt
& AMC offer huge operating leverage
● Share of Capital Mkt ~28% in 9MFY17
vs ~22% in 9MFY16, Asset & Wealth
~37% vs ~22% & HFC ~19% vs ~18%
Rs 12.8 bn
in 9MFY17
Revenues
Rs 2.7 bn
in 9MFY17
PAT
● It excludes Rs 1.9 bn unrealized
gains on our MF investments
● ROE target of sustainable 20%+
● Consistent dividends: Rs 2.5
interim in FY17 vs Rs 3.5 in FY16*
● Debt:Equity is 3X at Group level; &
0.7X excluding Aspire
● ~15% institutional holding
● Steady market share in MF Net Sales
● PMS AUM up 51% YoY to Rs 80 bn
● MF AUM up 48% YoY to Rs 71 bn
● PE AUA up 30% YoY to Rs 31 bn
● DP AUM up 35% YoY to Rs 361 bn
● Wealth AUM up 49% to Rs 91 bn
● HFC Book up 136% YoY to Rs 33 bn
23%
in 9MFY17
ROE
Rs 186 bn
as of Dec 2016
AUM (MF, PMS, PE)
* On face value of Re 1 per share; FY17 dividend is only Interim, while FY16 dividend is Interim and Final
6
7. Well-positioned across the client pyramid
7
Affordable Housing Loan Families
Retail Broking and Distribution Clients
HNI Wealth Families
Institutions
AMC Distributors
Corporates
620+
100+
36,000+
840,000+
2,000+
2,200+
8. Corporate governance
● Board consists of 6 Directors
● 50% comprised of Independent Directors
● MOFSL has some major Board level Committees :
o Audit Committee
o Stakeholders Relationship Committee
o Nomination & Remuneration/Compensation
Committee
o Corporate Social Responsibility Committee
o Risk Management Committee
o Asset Liability Management Committee
o ESOP Committee
o Debenture Committee
o Finance Committee
8
● Ms Sharda Agarwal co-founded a strategy marketing consulting firm.
Previously, she set up a consulting-market research firm
● Mr Vivek Paranjpe is an HR consultant with Reliance Industries. Prior
to this, he was with HP, Hotel Corp, J&J, Hindustan Lever
● Mr Praveen Tripathi is CEO of Magic9 Media & Consumer Knowledge
& Chairman of the NCCSC. He has worked with Pidilite, Hansa
Consulting, Zenithmedia, Starcom/Leo Burnett
● Ms Rekha Shah is the founder of Analyze N Control. Prior to this,
she had 16 years exp in manufacturing & financial sector
● Mr Praveen Tripathi (as above)
● Mr Hemant Kaul is an independent management consultant. Prior to
this, he held leadership roles in Bajaj Allianz & Axis Bank
● Ms Smita Gune is director of business risk at ANB. She has 30+ years
exp in BFSI industry with ICICI Bank, Hinduja, TATA Finance
● Mr Sanjaya Kulkarni has 40+ years exp in BFSI industry. He is also an
Advisor & I.C. Member of Motilal Oswal’s private equity funds
Independent Directors – Motilal Oswal Financial Services Ltd.
Independent Directors – Motilal Oswal Securities Ltd.
Independent Directors – Aspire Home Finance Corp Ltd.
Board – Motilal Oswal Financial Services Ltd.
10. Business-wise strategic imperatives
Capital
Market
Businesses
Asset &
Wealth
Businesses
Housing
Finance
Retail Broking & Distribution
Institutional equities
Investment banking
Use digital platforms & technology methods to expand client biz at lower costs
Deepen the financial product distribution biz, to build steady annuity revenue
Maintain profitability despite cycles; Capture the operating leverage this biz offers
New research products & corporate outreach to boost market share
Blocks has held steady within institutional volumes; set to continue
Bring high-quality companies to the market
Leveraging the emerging equity raising opportunities
Private equity
Asset management
Wealth management
Earning a respectable yield due to higher share of equity/alternate in AUM mix
Improving client wallet-share, product penetration & AUM-advisory mandates
Equity -specialist positioning with our time-tested QGLP philosophy forms the USP
Bring AUM market share towards net flow market share; Expand in offshore market
Capture fundamentally-strong, high-quality & high-growth companies
Initial PE/RE funds have demonstrated profitability & scalability; expect to continue
Affordable housing finance
Building a scalable & high-ROE business, backed by operational excellence
Expansion in new/existing states, technology usage & re-ratings to drive this biz
Fund Based
Business
Sponsor commitments Leveraging our time-tested QGLP philosophy by committing to 20%+ ROE avenues
Acts as a liquid treasury chest to help fund & scale up our new businesses
10
11. 11
• Retail Broking & Distribution
• Institutional Equities
• Investment Banking
• Asset Management
• Private Equity
• Wealth Management
Asset & Wealth Businesses
• Sponsor commitments to our
AMC & PE funds
• NBFC LAS book
Fund Based Business
Capital Market Businesses
• Aspire Home Finance
Housing Finance
12. Broking activities (MOSL)
12
● Sizable investments made in manpower (up 64% from Mar-2015), brand and technology since the last two years. Some of the
operating leverage from these is bearing fruit now, and the coming quarters should see the full benefit.
● 9MFY17 included profit on sale of mutual funds to the tune of Rs 292 million
● Market volumes grew 75% YoY in Q3FY17, with F&O up 79% YoY & cash up 21% YoY. Within cash, retail cash volume was up
27% YoY to Rs 122 billion in Q3FY17 while institution cash was up 26% to Rs 68 billion. MOSL’s volume grew 48% YoY to Rs 84
billion in Q3FY17. We held our cash market share in Q3FY17 on YoY & QoQ basis. But the continued shift to F&O in the market
meant our overall market share dipped from 2.3% in Q3FY16 to 1.9% in Q3FY17. Our blended yield in Q3FY17 was 3.1 bps
Held our market share
in the high-yield cash
segment YoY & QoQ
Digital & distribution biz
growing; CAG events
evincing good interest
Significant scope for
operating leverage
still exists in this biz
Biz consolidates to
larger brokers in every
up cycle
Particulars Q3 FY17 Q3 FY16 Q3 FY17 Q2 FY17 9M FY17 9M FY16 FY16 FY15
Rs million
Dec 31,
2016
Dec 31,
2015
Dec 31,
2016
Sep 30,
2016
Dec 31,
2016
Dec 31,
2015
Mar 31,
2016
Mar 31,
2015
Total Revenues 1,834 1,392 32% 1,834 1,877 -2% 5,216 4,107 27% 5,496 5,426 1%
EBITDA 747 377 98% 747 571 31% 1,815 1,121 62% 1,485 1,815 -18%
PBT 520 170 207% 520 349 49% 1,185 647 83% 794 1,493 -47%
PAT 429 122 253% 429 235 83% 904 474 91% 605 1,081 -44%
Change
(%)
Y-o-Y
Change
(%)
Y-o-Y
Change
(%)
Y-o-Y
Change
(%)
Q-o-Q
13. Retail Broking: Time-tested retail model poised for scale
13
● Growth in market share seen on YoY basis
● Retail clients added p.m. up 52% YoY
● Digital business were 44% of retail biz
● Mobile comprised 19% of online biz
● Financial product AUM up 73% YoY
● 50%+ accounts now opened through e-KYC
● Significant scope for operating leverage in this biz
● Highly underpenetrated market (demat only ~2%)
● Financial product distribution has huge scope
● System-driven tools might attract DIY clients too
● Market volume consolidates to larger brokers in
bull-phases; we are well-placed to ride this curve
● Relationship-based advice for stickier engagement
● Financial product distribution biz hold huge
potential, incl. for our manufactured products
● Leveraging technology for speed, UX & access
● Leveraging power of entrepreneurship with
franchisees to expand our network across India
● Own-branch biz in metros seeing strong uptick
What will
drive our
growth
● Market volumes may be volatile, but our business
model of branch+franchisee remains profitable
● Apart from franchisee’s variable model, even the
branch model has been turned profitable
● Automating back-end processes to reduce opex
● e-KYC, OAO speeding up processes at lower cost
Maintaining
profitability
Business
wins
Market
opportunity
14. Institutional Equities: Focus on research, sales, trading & outreach
● Present in both FIIs & DII segments; one of the
few Indian brokers to do so
● New research products & corporate outreach
creating client-pull & boosting market share
● Invested into algos/quants to push F&O biz
● Blocks has been in focus in cash biz; will continue
● Established track-record across both FIIs & DIIs
● New differentiated thematic research products
are evincing increased client interest
● Share of blocks holds steady in our volumes
● AGIC is one of the largest events in this segment
● Ranked amongst the top local brokers across
parameters in prestigious forums like AsiaMoney
What will
drive our
growth
Business
wins
14
Award-winning
Research
(Coverage 226)
Investing in
Sales & Execution
(Clients 624)
Multiple formats for
outreach; CAG events
evincing good interest
Best in Class Institutional
Broking (High ranks in
Award forums)
15. Investment Banking: Focusing on emerging opportunities
15
● Our IB business continues to consolidate on the back of the momentum it has built over the recent quarters
● We concluded some ECM transactions and filed DRHP for 4 companies with SEBI. These transactions are part of our
pipeline of transactions in the coming quarters
● We announced a large cross-border M&A transaction. This transaction is expected to be completed in Q4FY17
● The pipeline for the current quarter looks promising, both in ECM & Advisory transactions
Focusing on bringing
high-quality companies
to the market
ECM biz has gained
momentum with deal
closures and growth
Pipeline is promising;
optimistic about the
biz’s growth prospects
Particulars Q3 FY17 Q3 FY16 Q3 FY17 Q2 FY17 9M FY17 9M FY16 FY16 FY15
Rs million
Dec 31,
2016
Dec 31,
2015
Dec 31,
2016
Sep 30,
2016
Dec 31,
2016
Dec 31,
2015
Mar 31,
2016
Mar 31,
2015
Total Revenues 151 38 300% 151 202 -25% 444 164 171% 249 201 24%
EBITDA 131 (16) nm 131 82 60% 252 9 2576% 32 12 162%
PBT 130 (20) nm 130 81 61% 247 (1) nm 19 (2) nm
PAT 87 (14) nm 87 51 71% 170 (1) nm 8 (1) nm
Change
(%)
Y-o-Y
Change
(%)
Y-o-Y
Change
(%)
Y-o-Y
Change
(%)
Q-o-Q
16. Investment Banking: Focusing on emerging opportunities
16
● Bringing high-quality companies to the
market by acting as a strategic CFO
● Participating in further ECM opportunities
● Deal pipeline looks promising
● Momentum in deal closures & revenue growth
● Concluded some ECM transactions this quarter
● Filed DRHP for 4 companies with SEBI
● Announced a large cross-border M&A deal
What will
drive our
growth
Business
wins
17. 17
• Retail Broking & Distribution
• Institutional Equities
• Investment Banking
• Asset Management
• Private Equity
• Wealth Management
Asset & Wealth Businesses
• Sponsor commitments to our
AMC & PE funds
• NBFC LAS book
Fund Based Business
Capital Market Businesses
• Aspire Home Finance
Housing Finance
18. Asset Management: Positioned as a niche equity specialist
18
Rank in Equity AUM*
10 in Dec 2016
vs 12 in Dec 2015
YTD Eq. MF Market Share**
~3.1% in Net Flows
~1.2% in Avg AUM
Net Sales
Rs 15 bn in Q3F17
37% YoY
AUM
Rs 155 bn as of Dec
53% YoY
Earns a net yield of close
to ~1%, which is best-in-
class in the industry
Maintained our
market share in MF
net inflows in this YTD
Positioning of Equity
specialist with QGLP
philosophy is paying off
Financial savings story
& offshore expansion
to contribute ahead
● Q3FY17 saw higher net inflows (Rs 15 billion vs Rs 11 billion each in Q2FY17 & Q3FY16), as we deepened distributor relationships
● We are methodically building our positioning as “equity specialists” with our QGLP philosophy, which has consistently
delivered on performance. As of Dec 2016, our longest-running Value PMS scheme had delivered ~24% CAGR in 13 years***
● Brand/marketing spends up 199% YoY this YTD (incremental spend of Rs 78 million). This should boost brand-recall in long term
● Our flagship MF product, F-35, will finish 3-year performance track record in April 2017, which will likely enhance participation
from distribution channels
Particulars Q3 FY17 Q3 FY16 Q3 FY17 Q2 FY17 9M FY17 9M FY16 FY16 FY15
Rs million
Dec 31,
2016
Dec 31,
2015
Dec 31,
2016
Sep 30,
2016
Dec 31,
2016
Dec 31,
2015
Mar 31,
2016
Mar 31,
2015
AUM (Billion) 155 101 53% 155 150 3% 155 101 53% 105 61 72%
Net Inflows (Billion) 15 11 37% 15 11 35% 34 44 -22% 52 23 129%
Total Revenues 876 511 72% 876 748 17% 2,208 1,298 70% 1,852 881 110%
EBITDA 222 116 92% 222 140 59% 493 255 93% 364 61 496%
PBT 220 113 95% 220 138 60% 489 246 98% 354 52 574%
PAT 145 75 94% 145 92 58% 321 194 65% 264 52 404%
Change
(%)
Y-o-Y
Change
(%)
Y-o-Y
Change
(%)
Y-o-Y
Change
(%)
Q-o-Q
**Inception Date: 24/03/2003. These returns are of a Model Client as on 31st Dec 2016. Returns of individual clients may differ depending on time of entry in the strategy. Past
performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. Returns shown are post fees and expenses
**Includes only Open-Ended Equity Mutual Funds
*Rank includes our AUM in Equity MF, PMS & AIF; while Industry AUM includes Equity MF assets excluding Equity Arbitrage funds
19. Asset Management: Positioned as a niche equity specialist
19
● Rank in Equity AUM was 10 vs 12 a year ago
● Rs 155 bn AUM (MF/PMS/AIF), up 53% YoY
● Rs 15 bn Net Sales in Q3FY17, up 37% YoY
● Equity specialist positioning paying off, as our net
flows were strong despite a slowdown in market
● QGLP’s long-term track record seen with our
Value PMS strategy (~24% CAGR in 13 years*)
● FII:DII holding in institutional segment is 2/3:1/3rd;
we are only in the domestic market & are now
tapping the offshore market with MO India Fund
● FY02-08 saw industry equity AUM grow at 49%
CAGR. As financial savings pick up, it will sustain
● As we maintain flows, AUM market share of 1.2%
will move closer to net sales market share of 3%
● QGLP, our time-tested investing process, is our
main differentiator in front of clients
● Deepening & widening the B2B distributor base
● As our flagship MFs finish 3-year track record, it
will enhance participation from distributors
● Expansion into offshore, apart from domestic mkt
What will
drive our
growth
● B2B sales firm focused on its core competency of
investing, rather than investing in B2C sales
● Discretionary spending like advertising, which are
up now, will taper as MOAMC brand builds recall
● Huge scope for operating leverage as AUM grows
Maintaining
profitability
Business
wins
Market
opportunity
*Inception: 24/03/2003. Returns are of a Model Client as on 31st Dec. Returns of individuals may differ depending on time of
entry. Past performance may not be sustained in future & should not be used for comparison. Returns are post fees & exp
20. Private Equity – Traction in fund-raising & investments
20
● IBEF I has seen 6 full-exits & 2 partial exits in 2 companies till-date, translating into ~201% capital returned
(INR). It is in advanced stages for 1 exit in coming months, which may allow it to return an addl. ~14% capital.
It is likely to deliver a gross multiple of ~3.5X
● IBEF II committed ~89.5% across 10 investments so far, after raising commitments from marquee institutions
● IREF I has seen full/partial exits from 6 projects so far, translating into ~88% capital returned to investors
● IREF II is fully deployed in 11 investments. It secured 2 full exits and has returned ~ 27% money to investors
● IREF III has raised commitments of ~Rs 8.8 billion so far, of which ~50% is committed in 7 investments
Growth
Capital
PE Funds
Consolidated results of the PE-entities. Exceptional Item includes revenue from share in profit on sale of investments (carry share) made in the 1st PE growth fund
Real Estate
Funds
Real Estate Fund biz has
shown significant
scalability
1st PE fund likely
to deliver an approx.
~3.5X gross multiple
Size & speed of fund
raising in recent funds
better than predecessors
Growth Private Equity
Funds biz demonstrated
very robust profitability
Particulars Q3 FY17 Q3 FY16 Q3 FY17 Q2 FY17 9M FY17 9M FY16 FY16 FY15
Rs million
Dec 31,
2016
Dec 31,
2015
Dec 31,
2016
Sep 30,
2016
Dec 31,
2016
Dec 31,
2015
Mar 31,
2016
Mar 31,
2015
Total Revenues 100 102 -3% 100 129 -23% 316 314 1% 466 436 7%
EBITDA 40 46 -13% 40 29 38% 98 117 -16% 152 147 4%
Exceptional items 0 0 nm 0 400 -100% 503 0 nm 0 0 nm
PBT 35 44 -20% 35 427 -92% 594 109 445% 143 140 2%
PAT 22 36 -38% 22 329 -93% 473 86 452% 104 108 -4%
Change
(%)
Y-o-Y
Change
(%)
Y-o-Y
Change
(%)
Y-o-Y
Change
(%)
Q-o-Q
21. Private Equity – Traction in fund-raising & investments
21
● Healthy exits from the older funds helping raise
larger-ticket fund raise from marquee institutions
● Regular exits from existing funds to drive flow of
carry income
● Traction in speed of fundraising in new funds
means flow of fee income to start earlier
What will
drive our
growth
● PE business has demonstrated high profitability
● RE business has shown significant scalability
● Size of each subsequent fund has been larger
than its predecessor fund, both in PE & RE funds
● 1st PE fund likely to deliver a 3.5X gross multiple
Business
wins
22. Gaining
traction
Wealth Management: Focus on relationships & yields
22
● Traction in Sales people (from 68 to 78 YoY) and in improvement in RM productivity helped boost AUM
● The higher share of equity & alternate products in our AUM mix translates into a better yield of ~0.8%
● Inclination to invest in financial assets remains high, we believe flows should be brisk in the coming quarters
● Ample scope for scalability exists, as the business builds synergies with the other businesses of the Group
Deepening our
client wallet-share
& RM productivity
Earns a respectable yield of
~0.8%, due to high share of
equity & alternates
Further improvement in
RM productivity will
add scale at lower cost
RM Count
15% YoY
Wealth AUM
Rs 91 bn
49% YoY
Client Families
21% YoY
23. Wealth Management: Focus on relationships & yields
23
● Wealth AUM at Rs 91 bn was up 49% YoY
● Client families up 21% YoY
● Improvement in product penetration & client
wallet-share is reducing the concentration risk
● The biz turned significantly profitable last year
● Inclination to invest in financial assets remains
high, so flows should be brisk in coming quarters
● India had ~0.15 mn UHNIs in FY16, a 20% 5-Year
CAGR. As incomes across professionals, inheritors
& entrepreneurs grow, it will deepen this pool.
Many new HNIs are yet to make WM relationships
● Deepening of client wallet-share, product
penetration & AUM-advisory mandates
● Traction in sales people and in improvement in
RM productivity helping boost our AUM
● Huge scope for scalability as it builds synergies
with the Group’s businesses to deepen its reach
What will
drive our
growth
● We earn a respectable yield in this biz, due to the
higher share of equity & alternate products in our
AUM mix; this translates into better profitability
● As RM productivity improves even further, it will
add scale at much lower incremental cost
Maintaining
profitability
Business
wins
Market
opportunity
24. 24
• Retail Broking & Distribution
• Institutional Equities
• Investment Banking
• Asset Management
• Private Equity
• Wealth Management
Asset & Wealth Businesses
• Sponsor commitments to our
AMC & PE funds
• NBFC LAS book
Fund Based Business
Capital Market Businesses
• Aspire Home Finance
Housing Finance
25. Aspire – On course to build an affordable housing finance entity
25
Banks given credit lines*
31 in Dec 2016
vs 19 in Dec 2015
HFC Loan Book
Rs 33 bn
136% YoY
Expanding further
into the existing
4 states
Digitization efforts
boosting operational &
process improvements
Healthy ratings
helping raise liabilities
at competitive cost
Strong liquidity in
Group’s B/S (~Rs 8.2
bn) to fund Aspire
Gross NPL
0.6% in Dec 2016
vs 0.2% in Dec 2015
Aspire NIM#
~415 bps in 9MFY17
vs ~414 bps in 9MFY16
•Term-loan drawdown from 29 banks and 2 NBFC
26. Aspire – On course to build an affordable housing finance entity
26
•# NIM, ROA and ROE figures are on annualized basis
● In terms of network, our branches doubled on YoY basis to 84 across the existing four states
● In terms of assets, our loan book was Rs 33 billion across ~36,000 families. The average yield has held at ~13.4% since the
last 4 successive quarters. The annualized ROA for 9MFY17 was ~2.6%#, while ROE was ~15%#
● Asset quality is under control, with the GNPL at 0.6% as of Dec; this is without using the relaxation offered by RBI in NPA
recognition norms post demonetisation
● Liability profile is diversified, with ~53% borrowings from NCD, ~31% from term loans & ~16% from CP. Average cost of
borrowings so far has been ~9.6%, while it was ~9.1% on the borrowings raised in this YTD. The Debt/Equity ratio was 5.8x
● Cumulative capital infusion from sponsor is Rs 5 billion and net worth is Rs 6 billion, as of Dec 2016. Strong liquidity in
Group’s B/S is adequate for Aspire’s funding, as of now
● Invested significantly in Digitization for long-term operational and process improvements, through our Sales app, Credit app,
Customer app, Smart-Track for documents, Vendor Mngmt app, etc. Tabs are now provided to RMs/Credit Officers to push
app usage. We expect a large part of the total transactions to be covered by our digital initiatives by March 2017
4.2%
3.9%
9MFY17FY16
NIM
9MFY17FY16
ROE
16.0%
15.0%
9MFY17FY16
Branches
51
84
9MFY17FY16
ROA
3.3%
2.6%
27. Aspire – On course to build an affordable housing finance entity
27
● Loan book up 136% YoY to Rs 33 billion
● YTD disbursements up 38% YoY to Rs 15 billion
● 31 banks & NBFC given credit lines vs 19 YoY
● NIM* was 415 bp in 9MFY17 vs 414 bp in 9MFY16
● 9MFY17 ROA was 2.6%* & ROE was 15%*
● Yield held at ~13.4% for 4 successive quarters
● Borrowing cost at 9.6%; & 9.1% on YTD borrowings
● Significant scope in need-based affordable housing,
given the low mortgage penetration in India
● Announcements in the Union Budget & recent
initiatives by Government augur well for the sector
● However, the resultant increase in competitive
intensity could impact the metrics for the players
● Our focus segment, “affordable housing finance”,
is under the spotlight of Government initiatives
● Deepening our network further in existing states
& expanding into the contagion states
● Leverage, now at 5.8X, can be pushed further
● Maintaining strict risk & underwriting parameters
● Strong liquidity in Group’s balance sheet, along
with its free cash flows, to fund Aspire’s needs
What will
drive our
growth
● Further changes in ratings (Crisil A+/Stable & ICRA
AA- Stable) will help lower the cost of funding
● Invested in Digitization for long-term operational
and process improvements, & control CIR %
● Asset quality under control, given as much focus is
on risk & underwriting as is on scale & productivity
Maintaining
profitability
Business
wins
Market
opportunity
* ROA, ROE & NIM are on annualized basis
28. 28
• Retail Broking & Distribution
• Institutional Equities
• Investment Banking
• Asset Management
• Private Equity
• Wealth Management
Asset & Wealth Businesses
• Sponsor commitments to our
AMC & PE funds
• NBFC LAS book
Fund Based Business
Capital Market Businesses
• Aspire Home Finance
Housing Finance
29. Fund based business: Commitments to grow ROE
29
● These commitments have not only helped “seed” our new businesses by investing into highly scalable opportunities, but
they also represent highly liquid “resources” available to use for future investments into business, if required
● Post-tax XIRR of these investments (since inception) of ~19% validates the demonstrated long term performance track record
of our QGLP investment philosophy (Value PMS scheme has delivered 24% CAGR* in 13 years)
● PAT reported in MOFSL Standalone includes dividend from Private Equity business on account of carry share; which being
intercompany gets eliminated in the Consolidated financial statements
Exceptional items includes share in profit on sale of investments (carry share) made in the 1st PE growth fund, as well as the impact of a write-off on account of doubtful NPA
MOFSL Standalone
* Inception Date: 24/03/2003. These returns are of a Model Client as on 31st Dec 2016. Returns of individual clients may differ depending on time of entry in the strategy. Past
performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. Returns shown are post fees and expenses
Unrealized gain on MF
investments: Rs 1.9 bn
(not included in P/L)
Strategic allocation of
capital to long term
20%+ RoE opportunities
Investments in MO
mutual funds
(at cost): Rs 6.3 bn
Investments in MO
PE/RE funds
(at cost): Rs 2.5 bn
LAS lending book:
Rs 2.3 bn, is now
run as a spread biz
Post tax XIRR of these investments
is ~19%, higher than 7-9% returns
earned previously
Exits from 1st PE fund
led to portfolio gains of
Rs 0.3 bn in this YTD
Particulars Q3 FY17 Q3 FY16 Q3 FY17 Q2 FY17 9M FY17 9M FY16 FY16 FY15
Rs million
Dec 31,
2016
Dec 31,
2015
Dec 31,
2016
Sep 30,
2016
Dec 31,
2016
Dec 31,
2015
Mar 31,
2016
Mar 31,
2015
Total Revenues 192 344 -44% 192 681 -72% 1,243 941 32% 1,109 1,292 -14%
EBITDA 149 307 -51% 149 636 -77% 1,099 778 41% 910 1,031 -12%
Exceptional items 0 0 nm 0 29 nm 37 0 nm 0 0 nm
PBT 45 226 -80% 45 549 -92% 797 504 58% 535 653 -18%
PAT 56 188 -70% 56 569 -90% 805 440 83% 465 605 -23%
Change
(%)
Y-o-Y
Change
(%)
Y-o-Y
Change
(%)
Y-o-Y
Change
(%)
Q-o-Q
30. Fund based business: Commitments to grow ROE
● Our older capital market businesses earn high
ROEs & good cash flows; and these are then
channelized into these treasury
commitments
● As our new businesses also scale up & start
returning capital periodically through
dividends, they will also flow into this
treasury chest
● These not only helped us seed new businesses
like Aspire & AMC, but they also represent
“highly liquid resources” for future investments
● Unrealized gain on MF investments: Rs 1.9 bn
(this gain is not included in the reported PAT)
● XIRR of MF investments is ~19% (higher than 7-
9% earned before this capital reallocation)
● Exits from 1st PE fund led to portfolio gains of
Rs 0.3 bn in this YTD
What will
drive our
growth
Business
wins
30
32. Net Worth (Rs million) & CAGRPAT (Rs million) & CAGR
*Prior figures have been regrouped wherever necessary
32
***Payout is calculated on Adjusted PAT for the respective years; FY17 dividend is only Interim, while dividend of FY16 & prior includes Interim and Final
Revenues (Rs million) & CAGR**
Revenue Composition (%)Consistent dividendsReturn on Equity (%)
Annual financial performance*
4,729 4,681
7,750
10,937
12,813
FY2013 FY2014 FY2015 FY2016 9MFY17
30%
1,091
395
1,436
1,691
2,698
FY2013 FY2014 FY2015 FY2016 9MFY17
27%
12,179
11,703
12,949
14,365
17,252
FY2013 FY2014 FY2015 FY2016 9MFY17
10%
9%
3%
12% 12%
23%
FY2013 FY2014 FY2015 FY2016 9MFY17
**CAGR has been annualized for the period
2% 1% 1% 0%
21% 20% 14% 10% 8%
20% 31%
13% 16% 16%
20%
19%
2% 1% 2%
2%
3%
63% 61% 63%
47% 38%
FY13 FY14 FY15 FY16 9MFY17
Broking & related IB Fee
Asset Mgt Housing Finance
Funds based Others
2.00 2.00
3.00
3.50
2.50
FY13 FY14 FY15 FY16 9MFY17
(Interim Divd)
DPS
33. 33
New drivers for topline & profit growth
• During the previous cycle, our growth was driven by only one engine, i.e. the capital market business. That alone helped us
deliver 10x growth in profits through the last cycle
• Now, we have 4 drivers – the capital market business, asset & wealth businesses, housing finance & fund based business;
which should help us capture the growth opportunities & improve our long-term ROE towards a sustainable 20%+
4 drivers for future profitability
Housing Finance, along with Asset Mgt & Broking
have led the YoY growth in revenues this year
PAT Mix change; rising proportion of Housing
Finance & Asset Management from 2 years ago
● Capital Markets includes broking & investment banking
● Asset & Wealth Management includes asset management, private equity & wealth mgt
● Housing Finance includes Aspire Home Finance
● Fund Based Business includes sponsor commitments to our AMC funds & LAS book
28%23%
62%
37%
22%
14%
15%
32%
22% 19%23%
2%
9MFY17FY16FY15
Housing Finance
Fund Based Businesses
Asset & Wealth Management
Capital Market businesses
1,691 2,6981,436
7,769
12,813
1,035
2,723
862 130 274 21
9MFY16 Broking &
Related
HFC
related
AMC Fee
(incl PE)
Fund
based
IB Fee Others 9MFY17
34. 34
Latest quarter table
• During the previous cycle from FY04-08, our growth was driven by only one engine, i.e. broking. That alone helped us
deliver 10x growth in profits through that cycle. Now, we have 4 drivers – capital market businesses (broking &
investment banking), asset & wealth businesses, housing finance & fund based business; which should help us capture
the growth from a diversified revenue & profit base, & improve our long-term ROE towards a sustainable 20%+
Particulars Q3 FY17 Q3 FY16 Q3 FY17 Q2 FY17 9M FY17 9M FY16 FY16 FY15
Rs million
Dec 31,
2016
Dec 31,
2015
Dec 31,
2016
Sep 30,
2016
Dec 31,
2016
Dec 31,
2015
Mar 31,
2016
Mar 31,
2015
Brokerage & operating income 1,571 1,328 18% 1,571 1,858 -15% 4,860 3,825 27% 5091 4898 4%
Investment banking fees 148 36 306% 148 202 -27% 432 158 173% 242 193 25%
Asset management fees 945 607 56% 945 854 11% 2,451 1,589 54% 2235 1266 77%
Fund based Income 354 348 2% 354 194 82% 1,007 877 15% 1127 1102 2%
Housing finance related 1,525 627 143% 1,525 1,482 3% 4,010 1,287 212% 2195 229 858%
Other income 12 12 5% 12 18 -32% 53 32 66% 47 62 -25%
Total Revenues 4,555 2,959 54% 4,555 4,608 -1% 12,813 7,769 65% 10937 7750 41%
Operating expenses 846 606 40% 846 917 -8% 2,474 1,736 43% 2325 1945 20%
Personnel costs 676 639 6% 676 940 -28% 2,303 1,796 28% 2510 1902 32%
Other costs 416 413 1% 416 492 -16% 1,304 1,197 9% 1639 1308 25%
Depreciation 83 96 -13% 83 81 3% 237 255 -7% 349 307 14%
Interest 1,306 490 166% 1,306 1,120 17% 3,258 1,085 200% 1738 309 462%
Exceptional items 0 0 nm 0 429 nm 540 0 nm 0 0 nm
PBT 1,228 715 72% 1,228 1,486 -17% 3,777 1,700 122% 2376 1979 20%
Reported PAT 891 501 78% 891 1,016 -12% 2,698 1,219 121% 1,691 1,436 18%
EPS - Basic 6.2 3.5 6.2 7.1 - 18.8 8.6 11.9 10.3
EPS - Diluted 6.1 3.5 6.1 7.0 0.0 18.6 8.4 11.7 10.1
No.of shares outstanding
(million) - FV Rs 1/share
144 142 144 143 0% 144 142 142 139
Change
(%)
Y-o-Y
Change
(%)
Y-o-Y
Change
(%)
Y-o-Y
Change
(%)
Q-o-Q
35. 35
ROE Attribution
Proportion of Group Networth (Rs 17 billion as of Dec 2016) deployed across the 4 business segments
Segment-wise ROE* for the YTD period
* RoE calculated for 9MFY17 on Average Networth and annualised for FY17
# Treasury gains in Agency business P&L has been classified under Fund Based
& Net carry earned on PE exits shown under Asset & Wealth Management
@ Does not include unrealized gain on our MF investments (Rs 1.9 bn as of Dec 2016). The post-tax XIRR of these investments
(since inception) of ~19%; Other treasury investments are valued at cost
Capital
Markets
9%
Housing
Finance
34%
Fund
Based
52%
Asset &
Wealth Mgt
5%
Capital
Markets#
52%
Asset &
Wealth Mgt&
200%
Housing
Finance
15%
Fund
Based@
6%
36. 36
Well balanced growth this quarter
Revenue growth in Q3FY17 led by HFC & Asset Management, followed by
Capital Markets. Revenue diversification bearing fruit
Capital
Markets
+26% YoY
Housing
Finance
+143% YoY
Fund
Based
+2% YoY
Profits from all segments grew strongly in Q3FY17; Stability offered by
HFC & AMC complemented with upside offered by Capital Markets
Capital
Markets
+ 264% YoY
Asset &
Wealth Mngt
+ 43% YoY
Housing
Finance
+ 82% YoY
Fund
Based
+25% YoY
33%
18%30%
19%
Capital
Markets
Asset & Wealth Management
Housing
Finance
Fund
Based
Q3 FY17
Consol. Profit
`0.9bn
+78% YoY
16%
22%
43%
19%
Outer circle: Q3FY17
Inner circle: Q3FY16
38%
21%
8%
33%
Capital
Markets
Asset Management
Housing
Finance
Fund
Based
Q3 FY17
Consol. Revenue
`4.6bn
+54% YoY
46%
21%
12%
21%
Outer circle: Q3FY17
Inner circle: Q3FY16
Asset
Management
+56% YoY
In Revenues, Capital Markets includes broking, investment banking & wealth management, while Asset Management
includes mutual funds, PMS and PE; In PAT, wealth is part of Asset & Wealth Management, instead of Capital Markets
37. 37
Balance sheet
Rs million As on Dec 31, 2016 As on Mar 31, 2016
Sources of Funds
Networth 17,252 14,365
Loan funds 45,881 25,891
Minority interest 269 162
Deferred tax liability 230 62
Total 63,631 40,480
Application of Funds
Fixed assets (net block) 2,573 2,921
Investments 23,266 12,311
Deferred tax asset - -
Current Assets (A) 49,941 35,674
- Sundry debtors 8,902 7,099
- Cash & Bank Balances 2,538 2,867
- Loans & Advances 37,682 24,610
- Other Assets 819 1,098
Current liabilities (B) 12,149 10,426
Net current assets (A-B) 37,792 25,248
Total 63,631 40,480
39. • Working population is young
• Aspiring middle-class
• Per Capita GDP expected to rise
• Bank deposit returns falling short
• Low penetration means opportunity
• Acceptability of financial products
Right Mix
for Growth
Financial Services space set on a growth path in India…
39
Demand Side Supply Side
• Specialists & Super-stores both
co-existing for client segments
• Technology usage deepening
• Products have made a track-record
• Regulations more evolved & mature
• Intermediaries now more organized
40. 8%
8%
12%
14%
14%
16%
16%
13%
15%
20%
12%
14%
13%
11%
9%
14%
12%
26%
27%
17%
20%
23%
-2%
21%
20%
18%
8%
12%
10%
7%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
NominalGDP (CurrentPrice) - YoY Change
GrossNational Savings - YoY Change
India’s GDP (in US$, current prices) is expected to outpace
most large Emerging Markets during the next 5 years,
which augurs well for traction in income & savings…
India’s economic story spells opportunity for income & savings
Source: IMFSource: IMF
40
……sustained periods of GDP growth helped boost gross
national savings in India. Also, its savings grew faster
than GDP during such periods of high GDP growth
Favourable difference between inflation & per capita GDP growth
coincided with an increase in allocation towards equity investments
Source: RBI
3%
4%
3%
13%
4%
2%
0% -4%
3%
5%
-4% -4%
10% 10%
9% 8%
4% 4% 3% 3% 3% 3% 3%
0% 0%
Malaysia
India
Indonesia
China
USA
Mexico
Germany
Japan
Russia
UK
Korea
SouthAfrica
Brazil
Previous5-Year GDP CAGR(2010-2015)
Projected 5-Year GDP CAGR(2015-2020)
-2%
3% 3%
5% 5%
8% 8%
10%
6%
10%
7%
10%
4%
6%
7%
1.1 1.0 0.7 0.9 0.8
3.4
5.1
7.4
(0.2)
4.5
0.2
1.7
4.4
3.2 5.7
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
FY2015
Differencebetween WPI Inflation % and Per Capita GNP (constantprice)
Changesin Financial Assets in Shares& Debentures (Rs Bn)
41. Housing Finance holds ample potential; Moving from banks to HFCs
41
Source: ICRA
Source: ICRA
Source: ICRA
Source:: ICRA
Mortgage penetration rates (approx.) show India is still
relatively underpenetrated vs its Asian peers
Apart from the opportunity itself, this is also a lower-risk
market, especially the pure housing loan segment
Within the pure Housing-Only portfolio of all HFCs, that of
Small HFCs has outpaced the other HFCs (Rs Tn)
India’s housing credit market grew significantly in recent years;
HFCs share picked up as it grew at a faster pace than Banks (Rs Tn)
0.58% 0.57% 0.57%
0.54%
0.55%
0.80%
0.75%
0.80%
0.77%
0.73%
Mar-12 Mar-13 Mar-14 Mar-15 Mar-16
Gross NPA%for HousingLoan segment for HFCs
Gross NPA%- Overall forHFCs
9%
17% 20%
26% 29%
32%
39%
48%
81%
88%
India
Thailand
China
Korea
Malaysia
Singapore
Taiwan
Germany
UK
USA
1.3 1.7 2.1 2.7 3.2 3.9
4.4 4.73.2
3.8 4.2
4.8
5.7
6.6
7.5 8.1
Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Jun-16
HFC Banks
Housing Credit CAGR: 18%
Banks Housing Credit CAGR: 16%
HFCs Housing Credit CAGR: 22%
4.5
11.9
8.9
10.5
7.5
6.3
5.5
12.8
0.3 0.3 0.4 0.5 0.7 1.0 1.0
1.4 1.8
2.3
2.6
3.1
3.5 3.6
Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Jun-16
Small HFCs Other HFCs
All HFCs Housing-Only Portfolio CAGR: 21%
Small HFCs Housing-Only Portfolio CAGR: 31%
Other HFCs Housing-Only Portfolio CAGR: 19%
1.7
4.6
3.8
4.5
3.1
2.7
2.1
42. Equity MF spike up just like FY02-08 cycle; HNI wealth picking up
42
Source: AMFI
The last cycle from FY02-08 saw a significant rise in net sales;
It is seeing traction again since FY14 (Rs Bn)
Source: AMFI
The last upcycle from FY02-08 saw a significant spike in Equity MF
AUM; It has again seen rapid traction from FY14 onwards (Rs Tn)
PE deal values slowed down this quarter, as the number of
deals in the IT/Ecommerce space slowed down this year
India is home to ~0.2 mn HNIs, out of which ~0.15 mn are UHNIs;
UHNI growth and count has seen steady growth last 6 years
Source:: Kotak Top of Pyramid Report 2014
45
65
86
104
128
135
62,000
81,000
100,900
117,000
137,100
146,600
FY11 FY12 FY13 FY14 FY15 FY16
UHNI Net Worth (Rs Tn)
UHNI Count
0.2 0.1 0.3 0.4
1.0 1.2
1.7
1.1
2.0 2.0 1.8 1.7
1.9
3.5
3.9
4.7
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Dec-16
FY 2002-2008
CAGR: 49%
FY 2014-2017
CAGR: 39%
(5)
5 72 71
352
282
469
40 21 (131) 1 (146) (93)
710 740
416
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY169MFY17
During FY2003-2008,
the Equity MF net sales
to AUM ratio grew
from 5% to 27%
5
10
9 9 9
12
18
4
18
23
16
17 17
20
26
28
FY10 FY11 FY12 FY13 FY14 FY15 FY16 Q3FY17
DealValue (US$ Bn) Avg DealSize(US$ Mn)
Source:: Venture Intelligence
43. Cash volumes hold strong; retail cash volumes pick up
43
Source: NSE, BSE
Proportion of retail volumes in the cash volume mix
dipped slightly this quarter, though still above 50% range
Market ADTO picked up this quarter due to option;
cash volumes saw a temporary dip in Dec month (Rs Bn)
Source: NSE
23% 24% 29% 30% 35% 38%
44% 45% 44% 42%
43% 46% 47% 46% 48% 51%
26% 30%
30% 31%
30%
30%
28% 30% 32% 31% 30%
31% 31% 33% 32% 31%
51% 47% 41% 39% 35% 32% 28% 26% 25% 27% 27% 23% 23% 21% 21% 18%
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
FY2015
FY2016
Outside Top
100
Next75
Top25
Top100Members
Proportion of NSE cash
volumes consolidated to
the largest brokers during
bull-phases in the
markets, not bear-periods
40 65 61 55 75 7093 149 141 133 177 158325
513 502 456
667 618
1,565
2,614
2,304
1,832
3,090
3,475
FY14 FY15 FY16 Q3FY16 Q2FY17 Q3FY17
Options Futures Intraday Delivery
2,476
2,022
3,340
3,007
4,009
4,321
47% 50% 49% 51% 55% 53%
22% 21% 20% 20% 18% 17%
22% 21% 22% 20% 19% 20%
9% 8% 9% 9% 9% 10%
FY14 FY15 FY16 Q3FY16 Q2FY17 Q3FY17
DII FII Prop Retail
Source: NSE, BSE
44. FIIs clock healthy inflows; Higher-value IPOs pick up in FY17
44
Source: NSE
DIIs record strong inflows in each month of this quarter,
esp in Nov month (Rs Bn)
As momentum in IPO activity continued, incremental
demat accounts continued to grow at a healthy pace
Source: NSE, BSE
FIIs clocked net outflows in each month of this quarter,
following multiple events, esp in US (Rs Bn)
IPO raising has picked up since the last 2 years; FY17 has
also seen higher-value IPOs which is a positive sign
Source: PrimeSource: CDSL, NSDL
797
1,113
-142 -32
321
-307
FY14 FY15 FY16 Q3FY16 Q2FY17 Q3FY17
-542 -220
804
134
-85
353
FY14 FY15 FY16 Q3FY16 Q2FY17 Q3FY17
14.2 15.2 17.2 19.0 20.0 21.0 21.8 23.3 25.4
1.0
2.0
1.8
0.9 1.0 0.9
1.5
2.0
1.7
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 9MFY17
Existing Accounts (Mn) New Accounts (Mn)
20
472
412
105
65
89
30
145
245
17
42
57
37
23
37
42
73 70
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 9MFY17
IPO Amount (Rs Bn)
IPO Count
45. Disclaimer: This report is for information purposes only and does not construe to be any investment, legal or taxation advice. It is not intended as an offer or solicitation for the purchase or
sale of any financial instrument. Any action taken by you on the basis of the information contained herein is your responsibility alone and MOFSL and its subsidiaries or its employees or
directors, associates will not be liable in any manner for the consequences of such action taken by you. We have exercised due diligence in checking the correctness and authenticity of the
information contained herein, but do not represent that it is accurate or complete. MOFSL or any of its subsidiaries or associates or employees shall not be in any way responsible for any loss
or damage that may arise to any person from any inadvertent error in the information contained in this publication. The recipient of this report should rely on their own investigations. MOFSL
and/or its subsidiaries and/or directors, employees or associates may have interests or positions, financial or otherwise in the securities mentioned in this report.
Contact:
Sameer Kamath
Group Chief Financial Officer
Motilal Oswal Financial Services Limited
Tel: 91-22-3982-5500 / 91-22-39825554
Fax: 91-22-2282-3499
Email: sameerkamath@motilaloswal.com
Sourajit Aiyer
AVP–Investor Relations & Corporate Planning
Motilal Oswal Financial Services Limited
Tel: 91-22-3982-5500 / 91-22-39825510
Email: sourajit.aiyer@motilaloswal.com /
investorrelations@motilaloswal.com
Thank You