Motilal Oswal Financial Services Ltd. announced its results for the quarter and half year ended September 30, 2020 post approval by the Board of Directors at a meeting held in Mumbai on October30, 2020.
Performance for the quarter and half year ended September30, 2020:
- In Q2FY21, consolidated revenues grew by14% YoY at Rs 747cr, Operating Profit(PAT)grew by 33% YoY at Rs 123 cr, Consolidated PAT grew by 108% YoY at Rs 296 cr including MTM gains (Rs 173cr, +246% YoY).
- Consolidated revenues in H1FY21 grew by 8% YoY at Rs 1,380cr, Operating Profit (PAT) for H1FY21 grew by 18% YoY at Rs 226 cr and consolidated profit grew by 70% YoY at Rs 463 cr.
Speaking on the performance of the company, Mr. Motilal Oswal, MD&CEO said “During this unprecedented time, we have successfully migrated all of our employees to WFH and despite WFH we haven’t witnessed much impact on our businesses. In fact, in most of our fee based businesses we have seen strong traction; retail broking business which is our cash cow business has achieved new highs across every parameter. Our strategy to diversify our business model towards linear sources of earnings continues to deliver results. Our Asset Management business is likely to gain from strong product performance and its niche positioning .
Key highlights for the Q2FY21
- Highest-ever Consolidated Quarterly Revenues & Profits. Strong Sequential growth revenues and profitability across businesses.
- Broking – Highest ever Revenues & PAT, market share gains 80 bps YoY &10 bps QoQ, highest ever quarterly clients addition, significant investments made in last 12 months in expanding talent pool & distribution network.
- AMC – AUM back to pre-covid level, gross sales gaining traction, digitally launched NFO of S&P 500 index fund and Multi asset fund.
- Home Finance – Sharp reduction in cost of funds driving margin expansion, strong traction in collection efficiency during and post moratorium periods, aggressive covid-related provisions of Rs 23 cr, continued superior quality of new book underwritten, industry veterans on boarded to run the business – Arvind Hali joined as MD & CEO and Amar Bahl joined as Deputy MD & COO.
- Consolidated net worth stood at Rs 3,490cr, net debt is Rs 3,535cr. Excluding Home finance, net debt is Rs 832 cr. Overall debt is down by 2% YoY. Total D/E declined to 1.3x. Ex-MOHF D/E stood at 0.4x. Net of investments, we have a net cash balance sheet. RoE for H1FY21 stands at 36%(ex-OCI & exceptional item).
- Company has completed Buyback of its equity shares amounting to Rs 1.48Cr (including tax) resulting in increase in promoter equity in the company by 1.3% to 70.67%.
- Besides financial performance, recent time has been very eventful in terms of our successes in brand building, advertising and several other fronts. MOFSL got inducted in “Hall of Fame” at 10thFinancial Advisory Awards 2019. MOFSL rank 2nd“Best Local Brokerage” in Asia Money broker’s poll 2019.Our latest Ad on “Skin in the Game” has received appreciation in various media. These and several other recognitions of Motilal Oswal as a preferred consumer and employee brand in financial services space.
Performance of Business Segments for the quarter and half yearendedSeptember30, 2020
· Capital markets Businesses (Broking & Investment banking)
o Capital markets comprises of Retail Broking, Institutional Equities and Investment Banking business. Revenues for this segment were Rs 424cr, +37% YoY in Q2FY21 and Rs 767 cr in H1FY21, +31% YoY. Capital market businesses have contributed ~57% of consolidated revenues. Profits were Rs 80cr, +44% YoY and contributed ~27% of consolidated PAT.
o Broking and distribution business profit grew by 51% YoY and 33% QoQ at Rs 81cr in Q2FY21 led by healthy volume growth of 70% YoY and gain in market share. (PAT growth on YoY basis would have been 69% after excluding the impact of adoption to new tax regime in Q2FY20).
o In Retail Broking &Distribution, our Market share has improved by 80 bps on YOY basis to 3.1%. We have witnessed strong traction in new client addition driven by Franchisee and retail channel , total ~117,000 clients acquired in Q2FY21, +227% YoY. Active clients have also registered 35% YoY growth at 4.5 lacs as of September2020.
o Our strategy to bring in linearity through the trail-based distribution business is showing results. Distribution AUM grew by 9% QoQ at Rs 11,123cr as of Q2FY21. With only 14% of the 1.65million client base tapped, we expect a continued increase in AUM and fee income as number of clients to whom we have cross sold and number of products per client cross sold rises.
o In Institutional Broking, Strong improvement in domestic client rankings in H1 with top 3 rank retained in most clients. This has been the result of focus driven differentiated research products with 250+ companies covering 21 sectors. We hosted two large conference in September, AGIC & Ideation conference where >200+ corporate participated. Frequency of arranging webinars and expert calls has gone up significantly.
o Investment Banking business continues to engage on a wide cross-section of mandated transactions across capital markets and advisory. In Q2, we participated in two large QIPs in BFSI space.