Motilal Oswal Financial Services Limited

Motilal Oswal Financial Services Limited
BSE: 532892 ● NSE: MOTILALOFS ● Bloombe...
Corporate
Overview

Businesses

Strategy

Performance

Industry facts
Corporate
Overview

● Group Profile & Structure
● Evolution
● Our Businesses
● Our Strengths
● Corporate Governance
● Mana...
Group Profile and Structure
●

Well-diversified, financial services company offering a range of financial products and ser...
Evolution
Broking

Integrated Financial Services
Housing Finance*
Mutual Fund

Mutual Fund

Principal Strategies

Principa...
Our Businesses

Broking and
Distribution
Independent
and
INSIGHTFUL
RESEARCH

Well established
DISTRIBUTION
NETWORK

Priva...
Our Strengths
Strong Brand
Name
Strong
Investment
Culture

Experienced Top
Management

Strong Risk
Management
Practices

I...
Corporate Governance
● MOFSL is committed to ensuring compliance with the best
practices in corporate governance
● Composi...
Management Team
Chairman & Managing Director

Joint Managing Director & Co-founder

Motilal Oswal

Raamdeo Agarawal

Direc...
Building Infrastructure for the Future – Motilal Oswal Tower
● MOFSL has invested in a new Corporate Office building in Pr...
Corporate
Overview

Businesses

Strategy

Performance

Industry facts

● Broking & Distribution
● Institutional Equities
●...
Retail Broking and Distribution
Offers services to retail clients, including (a) equity broking, (b) commodity broking, (c...
Retail Broking and Distribution
‘Partnering For Growth’ Franchisee Model

Leveraging on Technology

● Apart from branches,...
Institutional Equities: Research is our Strength
Our Research has won Awards consistently, recent being:-

● Provides equi...
Sample Research and Corporate Access
Recent Research– Providing vivid and deep insights into Indian Equities

9th Annual M...
Annual Wealth Creation Study
MOFSL conducted its 18th Annual Wealth Creation Study in December, 2013 on the topic “Uncommo...
Private Wealth Management
●

Private wealth management business had an AUM of `23.2 billion, as of Dec 2013

●

Our new an...
Investment Banking
● The investment climate continues to be vitiated due to macro
uncertainties and policy paralysis. As a...
Asset Management
Portfolio Management Services business (PMS)
●

Mutual Funds business (MF)

MOSL transferred the PMS busi...
Motilal Oswal MOSt Shares
Motilal Oswal MOSt Shares ETF Conclave
●

●

Conducted the 3rd MOSt Shares ETF Conclave in June ...
Private Equity
●

MOPE is an investment manager and advisor to private equity funds, and acts as an advisor and mentor to ...
Proposed Housing Finance - Aspire Home Finance Corporation Ltd
During Q2FY14, we invested into building a new housing fina...
Corporate
Overview

Businesses

Strategy

● Size of opportunity
● Our Strategic Focus
● Progress Against Strategy

Perform...
Size of Opportunity
India’s equity broking opportunity: Market size in terms of revenue pool expected to grow 6 times over...
Our Strategic Focus
● Leverage research and advisory capabilities

● Develop innovative, market-access products
for the AM...
Progress Against Strategy
Research
Consistently won awards for earnings estimation and best
recommendations, thus showcasi...
Corporate
Overview

Businesses

Strategy

Performance

● Financial Performance
● Recent Awards

Industry facts
Annual Financial Performance at a Glance
Consolidated revenues (` million)
6,453

EBIDTA (` million, margin %)
39%

43%

6...
Consistently Increasing Dividends
2.50

2.00
35%

2.00
1.40

30%

26%

25%

1.20

0.80

0.80

13%
0.50

35%

1.50

1.50
1....
Latest Quarter Performance
Particulars

` million
Total Revenues

Q3 FY14
Dec 31,
2013

Q2 FY14
Sep 30,
2013

Change
(%)
Q...
Recent Awards
Existing Businesses: Retail Broking and Distribution, Institutional Equities

'Best Performing National
Fina...
Corporate
Overview

Businesses

Strategy

Performance

Industry facts

● Equity Participation
● Investment Banking &
Priva...
Options dip QoQ in Market ADTO; Cash/delivery slightly down
Market ADTO saw a QoQ dip due to lower volumes clocked in
opti...
Retails’ percent picks up in Cash ADTO; FII inflows see uptick
Retail’s proportion within cash volumes has increased on a
...
Though still sluggish, ECM, DCM, M&A & PE post slight QoQ uptick
ECM activity showed a marginal QoQ uptick as the Powergri...
Redemptions hit most MF segments; Liquid props up MF AUM
Redemptions seen in all segments in Q3 FY14 except in Liquid;
Equ...
This report is for information purposes only and does not construe to be any investment, legal or taxation advice. It is n...
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Corporate Profile Dec 2013 (Retail Broking, Institutional Equities, Asset Management, ETF, Private Equity, Investment Banking, Wealth)

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Corporate Profile Dec 2013 (Retail Broking, Institutional Equities, Asset Management, ETF, Private Equity, Investment Banking, Wealth)

  1. 1. Motilal Oswal Financial Services Limited Motilal Oswal Financial Services Limited BSE: 532892 ● NSE: MOTILALOFS ● Bloomberg:MOFS:IN ● Reuters: MOFS.BO www.motilaloswal.com
  2. 2. Corporate Overview Businesses Strategy Performance Industry facts
  3. 3. Corporate Overview ● Group Profile & Structure ● Evolution ● Our Businesses ● Our Strengths ● Corporate Governance ● Management Team Businesses Strategy Performance Industry facts
  4. 4. Group Profile and Structure ● Well-diversified, financial services company offering a range of financial products and services ● Focused on wealth creation for all its customers, such as institutional clients, HNWIs and retail customers ● Network spread over 519 cities comprising 1,546 business locations operated by our business partners and us with 792,858 total registered customers ● Shares listed on the Bombay Stock Exchange and National Stock Exchange in Mumbai Motilal Oswal Financial Services Ltd. 99.95% 100% 85% 99.95% # 99.95% # 99.95% # 97.55% Motilal Oswal Securities Ltd. Motilal Oswal Investment Advisors Pvt. Ltd. MOPE Investment Advisors Pvt Ltd. Motilal Oswal Asset Management Co. Ltd. Motilal Oswal Wealth Management Pvt. Ltd. Aspire Home Finance Corporation Limited Motilal Oswal Commodities Broker Private Ltd. Institutional Equities Broking & Distribution Investment Banking Private Equity Real Estate PMS Mutual Funds Offshore Funds Financial Strategy Wealth Management Proposed Housing Finance Commodity Broking # through Motilal Oswal Securities Limited Data as on Dec 2013 4
  5. 5. Evolution Broking Integrated Financial Services Housing Finance* Mutual Fund Mutual Fund Principal Strategies Principal Strategies Principal Strategies Wealth Management Wealth Management Wealth Management Wealth Management Lending (LAS) Lending (LAS) Lending (LAS) Lending (LAS) Private Equity Private Equity Private Equity Private Equity Investment Banking Investment Banking Investment Banking Investment Banking PMS PMS PMS PMS PMS Distribution MF, IPO Distribution MF, IPO Insurance Institutional Equities Distribution MF, IPO Insurance Institutional Equities Distribution MF, IPO Insurance Institutional Equities Retail broking Retail broking Institutional Equities Institutional Equities Distribution MF, IPO Insurance Institutional Equities Retail broking Retail broking Retail broking Retail broking 1987 - 95 1996 - 2005 2006 - 2007 2008 2010 2013 *We are still in the process of obtaining necessary approvals to commence this business 5
  6. 6. Our Businesses Broking and Distribution Independent and INSIGHTFUL RESEARCH Well established DISTRIBUTION NETWORK Private Equity Asset Management STRONG RELATIONSHIPS with institutional investors And HNIs Wealth Management HIGH CREDIBILITY resulting in higher cross-selling opportunities Institutional Equities Investment Banking Housing Finance* Principal Strategies INTEGRATED FINANCIAL SERVICES PROVIDER *We are still in the process of obtaining necessary approvals to commence this business 6
  7. 7. Our Strengths Strong Brand Name Strong Investment Culture Experienced Top Management Strong Risk Management Practices Independent and Insightful Research Leadership in Franchisee Business Financial Prudence Large Pan-India Distribution Network 7
  8. 8. Corporate Governance ● MOFSL is committed to ensuring compliance with the best practices in corporate governance ● Composition of MOFSL’s Board of Directors: o The Board currently consists of 6 members with 50% composition of Independent Directors ● MOFSL has some major Board level Committees : o Audit Committee o Shareholders / Investors Grievance Committee o Remuneration / Compensation Committee o Nomination Committee o Risk Management Committee o ESOP Committee o Debenture Committee Balkumar Agarwal Mr Agarwal a retired IAS officer (1967 batch). He has served as Additional Chief Secretary, Secretary (Housing), Secretary (Transport), Secretary (Industries) to the Government of Maharashtra, and as the MD at Maharashtra State Warehousing Corp, Maharashtra State Financial Corp etc Asset Liability Management Committee o Independent Directors ● External auditors play a role in providing an independent assessment of MOFSL’s financial position Praveen Tripathi Mr Tripathi is the CEO of Magic9 Media & Consumer Knowledge Pvt Ltd. He is the Chairman of the National Consumer Classification System Committee and has also worked with Pidilite, Hansa Consulting, Zenithmedia, Starcom/Leo Burnett etc Vivek Paranjpe Mr Paranjpe is a consultant in HR & strategic management with companies like Reliance Industries, Blackstone etc. He was the Director, HR Operations at HP Singapore, and has worked with Hotel Corp, Johnson & Johnson, Hindustan Lever etc 8
  9. 9. Management Team Chairman & Managing Director Joint Managing Director & Co-founder Motilal Oswal Raamdeo Agarawal Director Navin Agarwal Research Rajat Rajgarhia Navin Agarwal Chief Operating Officer Ajay Menon Wealth Management A.V. Srikanth Chief Financial Officer Sameer Kamath Investment Banking Ashutosh Maheshvari Human Resources & OD Sudhir Dhar Asset Management Aashish Somaiyaa Marketing Broking & Distribution Vijay Goel Institutional Equities Private Equity Ramnik Chhabra Vishal Tulsyan Principal Strategies Srikanth Iyengar Housing Finance Anil Sachidanand 9
  10. 10. Building Infrastructure for the Future – Motilal Oswal Tower ● MOFSL has invested in a new Corporate Office building in Prabhadevi, Mumbai with the aim to consolidate all businesses within a single location and leverage on group synergies. ● Total built-up area is 260,000 sq feet across 12 floors at a cost of approximately `2.80Bn (funded through internal accruals and capitalised in balance sheet). Approximately 33% of the area would be let out in the initial years of operations ● Thus, MOFSL will be able to utilise significantly larger floor space at an incremental cost. 10
  11. 11. Corporate Overview Businesses Strategy Performance Industry facts ● Broking & Distribution ● Institutional Equities ● Wealth Management ● Investment Banking ● Asset Management ● Private Equity ● Housing Finance* *We are still in the process of obtaining necessary approvals to commence this business
  12. 12. Retail Broking and Distribution Offers services to retail clients, including (a) equity broking, (b) commodity broking, (c) currency trading and (d) distribution of financial products Customer Centric Approach Pan-India Distribution Reach ‘Knowledge First’ for Client Engagement ● The company’s ‘Customer First’ philosophy is ● Developed a Pan-India network in 519 ● Use of simplified research products which executed through strategic focus on: cities across 1,546 locations (branches + have been customized for retail clients to franchisees), while ensuring the quality of o Increasing distribution reach and customer help them understand the investment ideas the locations at the same time segmentation on individual client’s needs and enable them to take informed decisions ● Extensive distribution network provides o Offering a wide bouquet of products opportunities to cross-sell products o Develop in-house technology for enhanced customer experience o Customer connect through investor seminars for our clients and business partners ● Total registered client base of 792,858 includes 695,663 retail broking and distribution clients ● In line with the philosophy of Knowledge Total Registered Clients First, MOSL conducts education seminars for 792,858 773,716 746,932 709,041 investors and business partners each year on 621,215 a Pan India basis. One such series was the multi-city investor education series ‘Investor Ki Kahani Usi Ki Zubaani’, which saw a healthy turnout of investors in all the cities FY10 FY11 FY12 FY13 Dec 2013 Distribution (Locations & Cities) Business Location Retail Broking & Distribution Clients 550,401 628,012 657,119 679,848 695,663 568 1,397 FY10 FY11 FY12 FY13 Dec 2013 FY10 611 No of cities 552 527 519 1,644 1,579 1,484 1,546 FY11 FY12 FY13 Dec 2013 12
  13. 13. Retail Broking and Distribution ‘Partnering For Growth’ Franchisee Model Leveraging on Technology ● Apart from branches, MOFSL also operates a ● Delivery models: Our newly developed trading platform – LITE, is powerful, featurefranchisee-based business partner model rich, and available in multiple versions ● Some of our Business Partners have grown Lite-Web LITEmanifold in terms of scale of business ● Operates ‘Upper MOST’, an interactive online tool for business development, reward, recognition for business partners ● Online Account Opening industry first feature is MOSL’s Mobile LITE-Desktop ● Portfolio Tracking and Review: Review and restructuring of client portfolios and recommends model portfolios, etc My Motilal Oswal Portfolio Restructuring ● Advisory Platforms: Direct dissemination of MOSL research and recommendations, with interactive features and customized view Idea Dashboard 3.0 Advisory Dashboard Radar F&O Analytical tool Strong Advisory Infrastructure: ● Equity strategies brought out by MOFSL have seen good response from investors 13
  14. 14. Institutional Equities: Research is our Strength Our Research has won Awards consistently, recent being:- ● Provides equity cash and derivatives brokerage services for institutional clients ● Ranked No. 2 in Best Local Brokerage, Best Overall Sales ● Client base of 543 institutions, as of Dec 2013 Service, Best for Events and/or Conferences & No. 3 in Best ● Strong research team comprising over 25 research analysts for Most Independent Research Brokerage in the AsiaMoney Brokers Poll 2012 covering over 200 companies across 20 sectors ● Research product portfolio encompasses economic, sector, company and thematic reports ● Research is supported by extremely strong Sales Trading and Corporate Access teams ● Awards 2011, 2012 and 2013 ● Won 4 awards at the ET-Now Starmine Analyst Awards 2010 placing it amongst the Top 3 award winning brokers ● ● Conducts a number of corporate access events throughout the year. Its Annual Investor Conference is one the largest event Won awards at the Zee Business India’s Best Market Analyst Ranked 2 (Best Local Brokerage) by the AsiaMoney Brokers Poll 2010 and 2009 ● formats of its kind in this industry Rated No.1 (Best Recommendations Mid & Small Caps) and won awards in 3 out of 4 categories at the Starmine India ● Conducted its 9th edition in Mumbai in Sep 2013, with over 100 Broker Rankings 2009 from Thomson Reuters leading companies interacting with more than 600 global ● Ranked 2 (Best Indian Broker 2009) by Institutional Investor investors, translating into 3,000+ company-investor meetings ● No.1 Broker in ET Now-Starmine Analyst Awards 2009 14
  15. 15. Sample Research and Corporate Access Recent Research– Providing vivid and deep insights into Indian Equities 9th Annual Motilal Oswal Global Investor Conference 15
  16. 16. Annual Wealth Creation Study MOFSL conducted its 18th Annual Wealth Creation Study in December, 2013 on the topic “Uncommon Profits: Emergence and Endurance”. The presentation of the study was followed by a Panel Discussion. ● Identified TCS, TTK Prestige and Asian Paints as the biggest, fastest, consistent wealth creators ● It showed that 7 of the Top 10 Wealth Creators during 2008-13 were non-cyclicals ● Wealth creators defy the common maxim “high return, high risk". At the time of purchase, the P/E of wealth creators is lower than benchmark (i.e. lower risk), and yet the returns are higher ● Technology sector is poised to emerge as India's largest Wealth Creator in the near future ● Many young companies have emerged in the value creation zone, led by a good management Theme of this study was on ‘Uncommon Profits: Emergence and Endurance’. Key takeways were:● Uncommon Profits in companies = Uncommon Wealth Creation in stock markets ● Successful emergence of value creators is very rare; a strong corporate-parent in a non-cyclical business significantly increases the probability ● Endurance of value creators is mainly threatened by disruptive innovation/competition, major regulatory changes, and capital misallocation ● State-owned companies have become marginalized in Wealth Creation with their share collapsing from 51% in 2005 to 9% in 2013 The 18th Wealth Creation report can be downloaded by clicking on this link http://www.motilaloswal.com/Wealth_Cre ation_Study/Studies/ Mr Motilal Oswal – CMD, MOFSL and Mr Raamdeo Agrawal – Jt MD, MOFSL with Panel Members: Mr Kenneth Andrade – H ‎ ead Investments, IDFC Asset Management, Mr Anil Singhvi – Chairman, Ican Investors and Mr Sanjoy Bhattacharyya – Founder, Fortuna Capital 16
  17. 17. Private Wealth Management ● Private wealth management business had an AUM of `23.2 billion, as of Dec 2013 ● Our new and improved advisory proposition ‘Motilal Oswal Private Wealth Management (MOPWM)’ with the motto ‘Responsible Advisory’ was launched in Q4FY13. The value proposition is based on comprehensive risk profiling leading to portfolio advice which can be objectively tracked for value addition. MOPWM also launched India’s first Advisory Index and other indices which will help clients track the value addition by an advisor objectively - an Industry First Launch of the new MOPWM proposition ● Clients will have access to a multi asset class open architecture platform ● Present in Mumbai, Delhi, Kolkata, Bangalore, Hyderabad, Ahmedabad and Pune ● The business has been strengthened with the joining of A.V. Srikanth as CEO. Prior to this, he was with an Indian wealth management firm, where he played a significant role in growing the vertical. He was an integral part of the team that won several accolades for its product and advisory delivery Our Offerings: A comprehensive menu of Multi Asset Class Advisory Solutions Professional Money Managers Trading Alternative Assets • Mutual Funds • Equity • Private Equity • PMS • Fixed Income • Real Estate • Alternative Invst. Funds • Commodity & Currency • Structured Products Credit Solutions Wealth Transmission Specialized Services • IPO Financing, ESOP Funding • Estate Planning • Investment Bnkg. Services • LAS/LAP • Trust services • Offshore Advisory & Solutions • Institutional Credit Solutions • Wills • Hedging & Insurance Advisory Ancillary Services • Tax Advisory • Legal Advisory 17
  18. 18. Investment Banking ● The investment climate continues to be vitiated due to macro uncertainties and policy paralysis. As a result, transaction closures have been affected, though the deal pipeline remains healthy Select Transactions ● Won the “Asia Pacific Cross-Border Deal” and the “India M&A Investment Banker” awards in 2010 for the M&A transaction of India’s Shree Renuka Sugars and Brazil’s Equipav SA ● Won ‘M&A Boutique Firm of the Year’ and ‘Best Mid-Market Deal of the Year’ awards at the M&A Atlas Awards in Mumbai ● Given our strong expertise in cross border deals, we were the Lead Sponsor for the Latin America India Investors Forum in Nov 2011. This Forum was designed to connect corporates with institutional investors for business relationships between India and Latin America. M&A Atlas Awards, 2012 Latin America India Investors Forum, 2011 18
  19. 19. Asset Management Portfolio Management Services business (PMS) ● Mutual Funds business (MF) MOSL transferred the PMS business to Motilal Oswal AMC via slump sale with effect from Oct 2010 ● As on Dec 2013, PMS AUM was `13.4 billion ● As per SEBI data, our PMS had a market share of 8% in terms of discretionary-listed equity PMS assets, as of Aug 2011 PMS AUM (`Mn) 12,584 13,574 12,596 13,429 9,817 FY10 FY11 FY12 FY13 ● Mutual funds AUM across the 7 funds was `4.8 billion, as of Dec 2013 o MOSt Shares M50 ETF (M50) is India’s 1st Fundamentally Weighted ETF based on the S&P CNX Nifty Index o MOSt Shares Midcap 100 ETF (M100) is India’s 1st Midcap ETF based on the CNX Midcap Index o MOSt Shares Nasdaq 100 ETF (N100) is India’s 1st US equities based ETF, denominated in Indian Rupees o MOSt 10 Year Gilt Fund (10 Yr Gilt) is India’s 1st fund providing access to 10 Year benchmark Government Bond o MOSt Shares Gold ETF is India’s 1st Gold ETF which enables investment as well as consumption of pure gold for retail investors o MOSt Focused 25 Fund is investing in cos. with sustainable competitive advantages, quality, longevity & high growth potential o MOSt Ultra Short Term Bond Fund is investing in debt securities and money market securities Dec 2013 Mutual Funds AUM (`Mn) Mutual Funds AUM (Rs Bn) ● The AMC business has been strengthened with the appointment of Aashish Somaiyaa as CEO. He was earlier with a leading AMC as Head of Retail Business, where he played a significant role in growing the sales & distribution of its offerings through retail, banking and wealth channels across India & UAE 4,487 4,642 4,776 16% 3,740 9% 7% 19% 25% 13% FY11 FY12 FY13 Dec 2013 11% M-50 ETF Midcap 100 ETF Nasdaq 100 ETF Gold ETF Focus 25 Ultra Short Term 10 Year Gilt 19
  20. 20. Motilal Oswal MOSt Shares Motilal Oswal MOSt Shares ETF Conclave ● ● Conducted the 3rd MOSt Shares ETF Conclave in June 2013. The objective was to demystify ETFs by discussing its advantages, and open up discussions across manufacturers, distributors and strategists on global trends in ETFs. It included a panel discussion on ‘Making Most of ETFs’ and a detailed presentation of global ETF trends by Deborah Fuhr (Partner & Co-Founder, ETFGI) Motilal Oswal 2nd Value Investing Forum MOAMC hosted the 2nd edition of Value Investing Forum in Oct 2012. The topic was ‘Sources of Margin of Safety & its Importance in Value Investing’ Most Innovative Fund Awards ● Nasdaq 100 ETF won the ‘Most Innovative ETF Asia Pacific 2011’ award at the 8th Annual Global ETF Awards 2012 in USA ● The M50 ETF bagged the ‘Most Innovative Fund of the Year’ award at the CNBC TV18-CRISIL Mutual Fund Awards 2011 ● Launch of MOSt Shares Nasdaq 100 ETF MOAMC became the first Indian AMC to ring the opening bell at NASDAQ in USA during the launch of the Nasdaq 100 ETF 20
  21. 21. Private Equity ● MOPE is an investment manager and advisor to private equity funds, and acts as an advisor and mentor to the investee companies ● India Business Excellence Fund (IBEF) is a growth capital fund focused on the SME space with AUM of US$ 125 million, which has been fully committed across 13 companies. The fund has partially exited two holding companies till date via secondary sales at extremely healthy multiples. The fund has returned approximately 40% of capital to its investors so far ● India Realty Excellence Fund (IREF) is a domestic real estate fund with total AuA at `2 billion, which has been fully committed across 7 deals. Following full/partial exits from four projects till date, the fund has returned approximately 50% of capital to its investors so far ● The 2nd growth capital PE fund, India Business Excellence Fund-II, has received total commitments of approximately `9.5 billion from both domestic and offshore investors. This fund is currently evaluating several investment opportunities and has made two investments so far ● Our 2nd real estate fund, India Real Estate Fund-II has received final approval from SEBI and is currently in fund raising mode. This is a `3 billion domestic mezzanine real estate fund with a green shoe option of `2 billion Investment Process Won ‘Best Growth Capital Investor-2012’ award at the Awards for Private Equity Excellence 2013 21
  22. 22. Proposed Housing Finance - Aspire Home Finance Corporation Ltd During Q2FY14, we invested into building a new housing finance company – Aspire Home Finance Corporation Limited (http://www.ahfcl.com). This is being led by Anil Sachidanand, previously with DHFL as CEO. He brings with him 22 years of rich experience in the mortgage space. We are currently in the process of obtaining the necessary approvals for commencement of this business. It will be our endeavor to build a high quality institution with a strong value proposition which we believe can help us capture a sizable portion of this opportunity and add significant value for all stakeholders Housing finance: A promising opportunity 81% 88% 48% USA UK Germany Changing social factors: Increased urbanization and rise of nuclear families expected to boost the demand for dwelling 41% 7% ● 39% Hong Kong Young median age and its expected growth: Translates into an increased working population and demand for housing 32% Singapore ● 20% 29% Malaysia 17% 26% Korea Potential in Tier II/III cities: Mortgage growth has tilted towards tier-II/III cities in recent years China Represents Headroom for Growth for India Taiwan ‘Emerging Asia’ Peers India ● Low Penetration: India’s mortgage/GDP ratio improved from 4.5% in FY04 to 7% in FY12. However, it is still low vs. peers Thailand ● Housing Credit as a % of GDP Other Positive developments ● Market share of HFCs vs. Banks has increased from 26% to 35% from FY05 to FY12, on the strength of their comparatively superior service levels, product innovation, customization and targeting of specific client segments not addressed by banks ● HFCs to be included as eligible borrowers for financing low cost housing projects through ECBs, which should help in funding ● Regulatory initiatives for customers, like removal of prepayment penalty and uniformity in rates for old and new clients 22
  23. 23. Corporate Overview Businesses Strategy ● Size of opportunity ● Our Strategic Focus ● Progress Against Strategy Performance Industry facts
  24. 24. Size of Opportunity India’s equity broking opportunity: Market size in terms of revenue pool expected to grow 6 times over the next 10 years 697 Methodology: ● Current size of broking revenue pool estimated at `112Bn ● Market Cap to touch US$5Tn by 2020 based on GDP:Market Cap ratio of 1:1 ● Assume trading velocity to double from current 37% to ~80% by 2020 ● This gives a expected market size of ~`697Bn by 2020, comprising `243Bn in institutional and `454Bn in retail segment 454 6.2x Growth 112 80 243 32 FY 2010 Source: MOSL estimates Factors that will help achieve this growth ● Sustained economic, savings discretionary income growth and FY 2020E Institutional (Rs Bn) What Motilal Oswal is doing to create scale Retail (Rs Bn) Although certain external risks remain ● Increasing distribution reach across India ● High inflation and interest rates ● Using simplified research products ● Regulatory changes required DIIs to realign their marketing strategy to be able to channelize higher savings ● Increase in retail participation ● Client focused advisory services ● Increased ability of DIIs to mobilize savings ● Investor education for client engagement ● Launched AMC to mobilize investments ● Global recovery reducing India’s relative attractiveness among global funds ● Higher issues of fairly priced IPO/FPOs ● Develop relationships with corporates embarking on the next phase of growth ● Poor performance of IPOs post listing ● Tech-based tools for client’s convenience ● Technology for better client experience ● Higher India allocation by global funds ● Increase in fund raising by corporates ● Tap the allocation of India focused funds 24
  25. 25. Our Strategic Focus ● Leverage research and advisory capabilities ● Develop innovative, market-access products for the AMC platform ● Investor education and knowledge dissemination ● Grow the Investment Banking business ● Good quality Pan-India distribution network ● Strengthening Wealth Mgt’s product ● Ensure quality deal flow for Private Equity Increase Retail / Wealth Mgmt share bouquet and customized advisory ● Leveraging on technology Grow Fee based revenues ● Distribution of 3rd party products KNOWLEDGE FIRST Solid Research Increase Institutional market share ● Increase Research support Solid Advice ● Build strong institutional relationships ● Use Principal Strategies Group to maximise returns using risk free arbitrage strategies ● Grow the Capital Markets Lending book through wider and quality research ● Grow institutional derivatives business Grow Fund based revenues across client segments to complement our Risk-Free Balance Sheet and Flexible Cost Structure strong cash equities business ● Judicious use of Capital to ensure high Return on Equity and low Leverage ● Flexible Cost structure to maintain Profitability across market cycles 25
  26. 26. Progress Against Strategy Research Consistently won awards for earnings estimation and best recommendations, thus showcasing our strong research capabilities Retail Distribution Reach Strong distribution network across India, while maintaining the quality of the locations Corporate Access The Annual Motilal Oswal Investor Conference is reckoned as one of the best-in-class conferences in India for institutional investors Wealth Management Product Bouquet Strengthened Wealth Management’s product portfolio to offer multiple investment options and a holistic asset allocation for clients Private Equity businesses Strong on-ground relationships helped achieve a healthy portfolio for existing funds and ensure good mobilization for the new fund Investor Awareness on Equity Investing Continued its investor education initiatives and use of simplified versions of institutional research for the retail investors, in line with the Knowledge First philosophy Empanelment of Institutions Added to the number of domestic and foreign institutions empanelled Technology Tools and Platforms Successfully developed and implemented a number of techbased initiatives, including in-house developments Asset Management business Launched innovative mutual funds, most of which were India’s Firsts in terms of the market access provided by the investment products strategies Consistent Margins and Low-Risk Balance Sheet Flexible cost structure and negligible debt levels helped deliver consistent profit margins and strong RoE, despite market cycles 26
  27. 27. Corporate Overview Businesses Strategy Performance ● Financial Performance ● Recent Awards Industry facts
  28. 28. Annual Financial Performance at a Glance Consolidated revenues (` million) 6,453 EBIDTA (` million, margin %) 39% 43% 6,008 4,711 4,661 2,770 4,729 Reported PAT (` million, margin %) 38% 34% 37% 19% 26% 1,704 FY09 FY10 FY11 FY12 FY13 FY09 Net worth (` million); ROE % (based on Avg NW and Reported PAT) 20% 10,595 11,409 12,179 1,585 FY10 FY11 23% 22% 1,371 2,295 1,807 23% 1,744 FY12 FY13 1,039 896 FY09 FY10 FY11 1,091 FY12 FY13 Revenue Composition (%) Net Cash (` million) 2% 5% 14% 10% 2% 7% 13% 7% 70% 5,428 3% 6% 10% 10% 71% 72% 1% 11% 17% 2% 2% 13% 21% 2% 9,460 7,939 14% 12% 9% 3,250 9% 2,772 2,710 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 63% 2,144 FY09 FY09 69% FY13 FY10 FY11 Others Funds based business Broking & operating income FY12 FY13 Asset management fees Investment banking fees *Prior figures have been regrouped wherever necessary 28
  29. 29. Consistently Increasing Dividends 2.50 2.00 35% 2.00 1.40 30% 26% 25% 1.20 0.80 0.80 13% 0.50 35% 1.50 1.50 1.00 40% 20% 17% 15% 10% 10% 7% 5% - 0% FY08 FY09 FY10 DPS FY11 FY12 FY13 # Payout* # For FY13; `1 is paid as interim dividend + `1 is proposed dividend; Buyback has been proposed * Payout is calculated on Adjusted PAT for the respective years
  30. 30. Latest Quarter Performance Particulars ` million Total Revenues Q3 FY14 Dec 31, 2013 Q2 FY14 Sep 30, 2013 Change (%) Q-o-Q Q3 FY14 Dec 31, 2013 Q3 FY13 Dec 31, 2012 Change (%) Y-o-Y 9M FY14 9M FY13 Change Dec 31, Dec 31, (%) 2013 2012 Y-o-Y FY13 Mar 31, 2013 1,175 1,160 1% 1,175 1,150 2% 3,443 3,388 2% 4,729 EBIDTA 309 358 -14% 309 378 -18% 1,023 1,144 -11% 1,744 PBT (before E & EOI) 239 290 -18% 239 300 -20% 817 930 -12% 1,437 Adjusted PAT 162 188 -14% 162 189 -14% 535 621 -14% 969 Reported PAT 35 56 -37% 35 292 -88% 276 724 -62% 1,091 EPS - Basic 0.3 0.5 0.3 2.0 2.1 5.0 7.6 EPS - Diluted No.of shares outstanding (million) - FV Rs 1/share 0.3 0.5 0.3 2.0 2.1 5.0 7.6 139 139 139 145 139 145 145 E & EOI = Exceptional items & Extraordinary items, EOI = Extraordinary items 30
  31. 31. Recent Awards Existing Businesses: Retail Broking and Distribution, Institutional Equities 'Best Performing National Financial Advisor Equity Broker' award at CNBC TV18 Financial Advisor Awards 2013, for the 3rd year ‘Best Equity Broker’ award at Bloomberg UTV Financial Leadership Awards 2012 ‘Retailer of the Year (Banking & Financial Services)’ award at the Retail Excellence Awards 2012 Adjudged amongst Top 20 innovators in BFSI space at the Banking Frontiers Finnovity Awards 2012 ‘Best Equity Broking House’ award for FY11 at the Dun & Bradstreet Equity Broking Awards 2011 Felicitated by BSE for being Amongst the Top Five Performers in BSE Star – Mutual Fund and Amongst the Top Ten Performers in Equity Segment for the period Nov 2010 – Sept 2011 New Businesses: NBFC, Asset Management, Private Equity and Investment Banking ‘Best Capital Markets and Related NBFC’ award at the CNBC TV18 India Best Banks and Financial Institutions Awards 2011 Nasdaq 100 ETF won the ‘Most Innovative ETF Asia Pacific 2011’ award at the 8th Annual Global ETF Awards 2012 in USA ‘Most Innovative Fund of the Year’ award at the CNBC TV18-CRISIL Mutual Fund Awards 2011 for the M-50 ETF Investment Banking bagged ‘Asia Pacific Cross-Border Deal of the Year’ and ‘India M&A Investment Banker’ awards Ranked as No. 1 Broker in India at the ETStarmine Analyst Awards, 2009 Others Private Equity won ‘Best Growth Capital Investor-2012’ award at the Awards for PE Excellence 2013 ‘Excellence in HR through Tech’ and ‘Excellence in Healthcare’ awards at Asia’s Best Employer Brand Awards 2011 in Singapore ‘Quality Excellence for Best Customer Service Result’ award at National Quality Excellence Awards 2013 31
  32. 32. Corporate Overview Businesses Strategy Performance Industry facts ● Equity Participation ● Investment Banking & Private Equity ● Mutual Funds ● Wealth Management
  33. 33. Options dip QoQ in Market ADTO; Cash/delivery slightly down Market ADTO saw a QoQ dip due to lower volumes clocked in options; Overall cash and cash delivery also dipped slightly (Rs Bn) 2,209 1,335 315 101 39 133 50 Source: NSE, BSE FY11 FY12 Options 275 92 38 1,410 1,293 FY13 Futures 76% 78% 75% 68% 330 92 39 343 95 41 274 96 40 76% 29% 57% 388 2% 5% 18% 22% 1,729 1,274 16% 10% 1,705 1,431 977 764 2% 6% 2% 4% 16% 16% 2% 5% 3% 7% 4% 1,871 1,679 With lower option volumes on a QoQ basis, the proportion of options was slightly lower, while cash proportion saw an uptick Q3FY13 Intraday Q2FY14 Q3FY14 FY11 FY12 Delivery Delivery On a YoY basis, the proportion of delivery within cash volumes in the market has held steady at 30% FY13 Intraday Q3FY13 Q2FY14 Futures Q3FY14 Options Proportion of options within F&O in the market has tapered slightly owing to lower option volumes 19% 17% 30% 30% 70% Q3FY13 70% Q3FY14 Intraday to Cash Volumes Source: NSE, BSE Q3FY14 Q3FY13 81% 83% Delivery to Cash Volumes Source: NSE, BSE Futures to F&O Volumes Options to F&O Volumes Source: NSE, BSE 33
  34. 34. Retails’ percent picks up in Cash ADTO; FII inflows see uptick Retail’s proportion within cash volumes has increased on a QoQ basis, while that of FII and Prop segments dipped 7% 8% 9% 8% 15% 18% 19% 18% 22% 23% 56% 51% 8% 9% 19% 23% 1,400 1,101 22% 23% 23% After seeing net outflows from equities during the months from Jun to Aug, net inflows picked up in Q3FY14 owing to strong inflows clocked in Oct and Dec months (Rs Bn) 24% 51% 49% 44% 460 437 50% 399 10 FY11 Source: NSE, BSE FY12 DII FY13 FII Q3FY13 Prop Q2FY14 FY11 Q3FY14 FY12 FY13 Q3FY13 Q2FY14 Retail Source: SEBI DIIs have seen net outflows from equities since the last 6 consecutive quarters; The outflow clocked this quarter was much higher than earlier quarters, except for 4QFY13 (Rs Bn) Growth in new demat accounts (Mn) remains low, as primary market activities have largely dried up 8% CAGR FY11 FY12 FY13 Q3FY13 Q3FY14 Q2FY14 1.0 Q3FY14 0.8 20.0 0.9 21.0 1.8 2.0 -44 -53 -187 -187 -291 -691 Source: NSE 19.0 17.2 15.2 FY10 FY11 Existing Accounts (Mn) FY12 FY13 Dec-13 New Accounts (Mn) Source: CDSL, NSDL 34
  35. 35. Though still sluggish, ECM, DCM, M&A & PE post slight QoQ uptick ECM activity showed a marginal QoQ uptick as the Powergrid FPO issue boosted the Additional segment; However, ECM continues to remain dry as compared to earlier years (Rs Bn) 424 789 22 112 294 32 23 - 77 1 DCM saw a slight uptick on a QoQ basis buoyed by increase in domestic bond issues and foreign loan segment (Rs Bn) 5316 6275 1443 1,031 1,173 1370 884 270 189 649 514 2,453 343 207 612 22 75 2,084 446 260 59 Source: Bloomberg, BSE (for QIP) 65 FY12 FY13 QIP 55 1 Q3FY13 Q2FY14 Additional (FPO) 1 Q3FY14 IPO M&As deals picked up slightly this quarter on a QoQ basis; On a CY basis, cross-border deals saw increased activity while domestic deals saw a drop; Energy, power, healthcare, industrials and telecom clocked the highest % of deals in CY13 (US$Bn) FY12 Loans Mandated (Forg.) Q3FY13 Q2FY14 Loans Mandated (INR) Q3FY14 Source: Bloomberg Dom Bonds PE deal value picks up QoQ and YoY, largely due to the $420mn Global Logic-Apax Partners deal; Average deal value picked up as high-value deals were scarce in recent quarters (US$Bn/Mn) 8.9 17.1 8.2 5.5 Q3FY13 18.3 17.9 11.2 10.1 Source: Thomson Reuters news article FY13 24.8 20.0 CY13 461 249 29.9 CY12 659 2,791 2,059 7.1 Q2FY14 Q3FY14 M&A Total Deal Value in India - US$Bn 1.2 FY12 FY13 Deal Value (US$ Bn) Q3FY13 1.9 1.7 Q2FY14 Q3FY14 Avg Deal Size (US$ Mn) Source:: Venture Intelligence 35
  36. 36. Redemptions hit most MF segments; Liquid props up MF AUM Redemptions seen in all segments in Q3 FY14 except in Liquid; Equities seen net outflows in last 8 consecutive quarters (Rs Bn) Liquid funds have led the MF AUM growth on a YTD basis; Income and Equity saw slight growth; Dips in Gilt and Gold lowered Others 830 6,140 Liquid Other ETF 2% 12% 49% 3% 13% 50% 3% 3% 22% 56% 51% Q3FY13 Q2FY14 (0) (6) 0 (27) (92) (2) 30 11 (2) (41) (136) (412) (5) (10) (2) 199 FY13 (51) 32 40 14 (2) (144) 5 (185) (71) (0) 36 (6) FY12 36% 35% 8,258 7,014 14% 51% Gilt Gold ETF 1% 13% Income 526 Equity 5,872 5,923 34% 27% 24% Q3FY14 FY10 FY11 Others FY12 FY13 Income Liquid / Money Market Dec-13 Equity Source: AMFI Source: AMFI Decline in Gold ETF AUM has lowered the Indian ETF assets on YTD basis; Non-gold ETF assets also dipped marginally (US$Bn) India’s economic slowdown has impacted its Total Net Wealth in 2012 vs 2011 (US$ Bn); While China has held its ground, net wealth has also declined in 2012 in the broader Asia Pacific region Total Net Wealth (USD Bn) 0.11% 69,351 2.5 0.08% 0.07% 1.7 0.05% 80,233 0.13% 1.2 52,035 50,724 1.7 0.5 2009 67,291 68,173 19,628 20,190 2010 India ETF AUM ($Bn) 2011 2012 Nov-13 India ETF % to Global ETF AUM Source: AMFI/Blackrock report 3,892 9,456 8,696 3,193 India China 2011 Asia-Pacific Europe Latin America North America 2012 Source: Hubbis report 36
  37. 37. 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. Thank You Contact: Sameer Kamath 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 Sr. Manager–Investor Relations Motilal Oswal Financial Services Limited Tel: 91-22-3982-5500 / 91-22-39825510 Fax: 91-22-2282-3499 Email: sourajit.aiyer@motilaloswal.com / investorrelations@motilaloswal.com

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