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03 August 2020 Results Review 1QFY21
Motilal Oswal Financial Services
HSIE Research is also available on Bloomberg ERH HDF <GO> & Thomson Reuters
In-line performance A strong spurt in cash volumes (88.2% YoY) bolstered capital markets APAT
63.5% YoY (-5.9% vs. estimates), while a steep decline of 16.2% YoY in
QAAUMs meant that AMC's APAT declined 33.3% YoY (-8.8% vs. estimates).
Management enhanced provisions to 27.8% (+556bps QoQ) of GNPLs due to
the potential COVID-19 impact, which resulted in MOHL reporting a 35.1%
YoY lower APAT. Significant MTM gain (Rs 1.3bn, +272.3% YoY) on treasury
resulted in MOFS (ex. MOHFL) APAT growth of 98.1%. We have mildly
tweaked our estimates and retain ADD with an unchanged TP of Rs 715.
1QFY21 highlights: AMC (ex WM): Revenue/EBITDA/PAT were at Rs
1,255/410/292mn (-25.4/-38.2/-28.6% YoY). A recovery in markets, better
performance by MOFS' funds and launch of passive funds resulted in a
healthy inflow of Rs 3.2bn. Lockdown impacted new account openings for
the PMS business. Capital Markets (in. WM) reported
revenue/EBITDA/PAT of Rs 3,659/1,168/574mn (+21.9/26.4/61.2% YoY).
Broking ADTVs grew 50.8/3.6% YoY/QoQ with cash share improving
223/224bps YoY/QoQ to 11.2%; cash volumes increased 88.2% YoY. It also
resulted in blended yields improving 0.2/0.3bps YoY/QoQ to 1.1bps.
Distribution AUM improved 13.3% QoQ to Rs 102bn as equity markets
recovered. Management has provided ~Rs 0.7bn (post-tax) on account of
negative price settlement of customers' crude oil derivative positions.
Regulatory changes requiring the upfront collection of margins may result
in lower volumes, and this remains a risk for the industry. Treasury
reported MTM gain on investments (mainly equity MFs) of Rs 1.3bn. At
MOHFL the loan book declined to Rs 36.9bn (8th consecutive quarter
decline) as disbursements remained muted at just Rs 0.24bn/quarter. NNPA
was at Rs 1.3% (-10bps QoQ) as management provided additional coverage
in light of COVID-19. Management explained that ~26% of borrowers had
opted for a moratorium, but collection efficiency had improved in Jun/July-
20.
Outlook: The AMC business is showing traction despite a challenging
environment. The broking business is expected to do well over FY21E as
volumes continue to show strong traction; however, regulatory changes on
an upfront collection of client margins pose as key risks.
Financial Summary: MOFS (ex-MOHL) (Rs bn) 1QFY21 1QFY20 YoY(%) 4QFY20 QoQ(%) FY19 FY20 FY21E FY22E FY23E
Revenue 5.71 4.21 35.4 0.65 780.5 17.2 13.9 18.8 19.5 21.0
EBITDA 2.79 1.55 80.1 -2.41 NM 6.1 2.3 7.3 6.9 7.5
EBITDA Margin (%) 48.9 36.7 1,214bps (372.1) 42,097bps 35.7 16.3 39.1 35.4 35.9
APAT 2.22 1.12 98.1 -2.75 NM 4.1 1.1 5.7 5.1 5.6
P/E (x)
23.4 84.2 16.8 18.9 17.0
ROE (%)
15.0 4.0 19.1 15.3 15.5
Source: Company, HSIE Research
Estimate Change
Rs bn
FY21E FY22E
FY21E
Revised
FY21E
Old
Change
% / bps
FY22E
Revised
FY22E
Old
Change
% / bps
Revenues 18,756 18,792 -0.2 19,463 19,492 -0.1
EBITDA 7,342 7,400 -0.8 6,896 6,949 -0.8
EBITDA margin (%) 39.1 39.4 -23 35.4 35.7 -22
APAT 5,721 5,855 -2.3 5,077 5,125 -0.9
RoE (%) 19.1 19.4 -36 15.3 15.3 0
Source: Company, HSIE Research
ADD
CMP (as on 3 Aug 2020) Rs 671
Target Price Rs 715
NIFTY 10,892
KEY
CHANGES OLD NEW
Rating ADD ADD
Price Target Rs 715 Rs 715
EPS % FY21E FY22E
-2.3% -0.9%
KEY STOCK DATA
Bloomberg code MOFS IN
No. of Shares (mn) 148
MCap (Rs bn) / ($ mn) 99/1,318
6m avg traded value (Rs mn) 86
52 Week high / low Rs 905/426
STOCK PERFORMANCE (%)
3M 6M 12M
Absolute (%) 32.5 (13.2) 31.3
Relative (%) 22.9 (5.8) 31.8
SHAREHOLDING PATTERN (%)
Mar-20 Jun-20
Promoters 69.8 69.8
FIs & Local MFs 4.6 4.9
FPIs 9.8 9.6
Public & Others 15.9 15.7
Pledged Shares 0.00 0.00
Source : BSE
Madhukar Ladha, CFA madhukar.ladha@hdfcsec.com
+91-22-6171-7323
Page | 2
Motilal Oswal Financial Services : Results Review 1QFY21
MOFS (ex-MOHL) Results Summary: 1QFY21
(Rs mn) 1QFY21 1QFY20 YoY (%) 4QFY20 QoQ (%)
Adj. Revenues 5,705 4,214 35.4 648 780.5
Total costs 3,336 3,098 7.7 3,553 (6.1)
EBITDA 2,788 1,548 80.1 (2,411) NM
PAT 2,169 1,115 94.5 (2,691) NM
Less: interco adjustments 56 8 595.0 (57) NM
APAT 2,225 1,123 98.1 (2,748) NM
Adjustment: (666) - NM - NM
RPAT 1,559 1,123 38.8 (2,748) NM
AEPS 15.0 7.6 98.1 (18.6) NM
Source: Company, HSIE Research
PAT Break-up (segment wise)
Business segment (Rs mn) 1QFY21 1QFY20 YoY (%) 4QFY20 QoQ (%)
Broking 613 392 56.4 451 35.9
Investment banking (39) (41) NM (37) NM
Wealth management - 5 (100.0) 14 (100.0)
Total capital market 574 356 61.2 428 34.1
Asset management 240 348 (31.0) 357 (32.8)
Private equity 52 50 4.0 44 18.2
Total asset management 292 398 (26.6) 401 (27.2)
Fund based business 1,303 350 272.3 (3,520) NM
Con. APAT ex. MOHL before interco adj 2,169 1,104 96.5 (2,691) NM
Less: intercompany adjustments 56 19 192.6 (57) NM
Con. APAT ex. MOHL 2,225 1,123 98.1 (2,748) NM
MOHL 111 171 (35.1) 176 (36.9)
Consolidated APAT 2,336 1,294 80.5 (2,572) NM
Source: Company, HSIE Research
Broking performed better vs. Asset management in 1QFY21
PBT (Rs mn) 1QFY20 1QFY21 YoY (%) FY19 FY20 YoY (%)
Capital markets
Broking & distribution 596 814 36.6 2,485 2,532 1.9
IB -56 -52 NM 110 -113 (202.7)
Wealth management 7 1 (85.7) 199 83 (58.3)
Total 547 763 39.5 2,794 2,502 (10.5)
Asset management
Public equities 561 330 (41.2) 2,305 2,079 (9.8)
Private equities 94 74 (21.3) 462 387 (16.2)
Total 655 404 (38.3) 2,767 2,466 (10.9)
Source: Company, HSIE Research
Adj. revenue was aided by
MTM gain of Rs 1.3bn on
mutual fund investments.
Higher ADTVs (+50.8/3.6%
YoY/QoQ), and higher
cash share (+223/224bps
YoY/QoQ) drove
performance of broking
segment.
Page | 3
Motilal Oswal Financial Services : Results Review 1QFY21
Segment-wise financial highlights
Asset Management (Includes Private equity)
Particulars (Rs mn) 1QFY21 1QFY20 YoY (%) 4QFY20 QoQ (%)
Revenues 1,255 1,683 (25.4) 1,629 (23.0)
Total costs 845 1,020 (17.2) 1,069 (21.0)
EBITDA 410 663 (38.2) 560 (26.8)
PBT 404 655 (38.3) 557 (27.5)
PAT 292 409 (28.6) 401 (27.2)
Source: Company, HSIE Research
5 Quarters at a glance: Asset Management
(Rs bn) 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 YoY (%) QoQ(%)
QAAUM 389 NA NA 385 326 (16.2) (15.3)
Total AUM 388 383 401 296 350 (9.8) 18.2
MF AUM 199 199 211 160 196 (1.5) 22.5
PMS AUM 161 158 164 117 132 (18.0) 12.8
AIF AUM 28 26 27 19 22 (21.4) 15.8
Total Net inflows (4.0) 0.6 0.8 2.8 3.4 NM 20.0
Monthly SIP Inflows (Rs bn) 1.4 1.4 1.3 1.3 1.3 (11.3) (2.3)
SIP market share* (%) 1.8 1.6 1.6 1.5 1.6 -19bps 4bps
*Calculated Source: Company, HSIE Research
Capital Markets (Includes Broking, IB, distribution and wealth management)
Particulars (Rs mn) 1QFY21 1QFY20 YoY (%) 4QFY20 QoQ (%)
Revenues 3,659 3,002 21.9 3,645 0.4
Total costs 2,491 2,078 19.9 2,484 0.3
EBITDA 1,168 924 26.4 1,161 0.6
PBT 763 547 39.5 601 27.0
APAT 574 356 61.2 428 34.1
Adjustment (666) - NM - NM
RPAT (92) 356 (125.8) 428 (121.5)
Source: Company, HSIE Research
5 Quarters at a glance
Particulars 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 YoY (%) QoQ(%)
Broking revenues (Rs mn)* 1,027 1,147 1,352 1,492 1,864 81.5 24.9
Broking ADTV (Rs bn) (ex prop) 189 222 251 275 285 50.8 3.6
Market share (%) * 2.2 2.3 2.6 2.6 3.0 76bps 35bps
Blended yield (bps)* 0.9 0.8 0.9 0.8 1.1 0.2 0.3
Distribution
Distribution revs. (Rs mn) 216.0 293.2 311.3 263.4 166.2 (23.1) (36.9)
Distribution AUM (Rs bn) 97.0 99.0 104.0 90.0 102.0 5.2 13.3
Yield (bps)* 90 120 123 109 69 -2029bps -3937bps
Net inflows (Rs bn) 2.0 2.0 3.0 2.0 - (100.0) (100.0)
Wealth Management
Revenues (Rs mn) 221 279 252 255 221 - (13.3)
AUM (Rs bn) 180 181 189 156 178 (1.1) 14.1
Yield (bps) 62 62 60 60 54 -8bps -6bps
Net inflows (Rs bn) 4.6 1.5 1.3 - 8.0 73.9 NM
*Calculated Source: Company, HSIE Research
Revenue was hit by
16.2/15.3% YoY/QoQ lower
AAUMs in 1QFY21.
AUM grew 18.2% QoQ
driven by increase in
MF/PMS/AIF AUM by
22.5/12.8/15.8% QoQ.
Aashish Somaiyaa, MD
and CEO of MOAMC,
resigned after a 7 year stint
and Mr. Navin Agrawal
has taken charge as MD
and CEO of MOAMC.
Total costs grew 21.9%
YoY as company hired
~0.5k employees.
Company recorded a
provision of ~Rs 889mn
(pre-tax, Rs 666mn after
tax) on account of negative
price settlement effected by
MCX. However,
arbitration proceedings are
pending and we see merit
in the company’s
arguments.
Page | 4
Motilal Oswal Financial Services : Results Review 1QFY21
Broking ADTV's and market share
Rs bn 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 YoY (%) QoQ(%)
Cash ADTV 17 15 19 25 32 88.2 29.5
Derivative ADTV 172 207 232 250 253 47.1 1.1
Total ADTV 189 222 251 275 285 50.8 3.6
Market share # (%)
Cash ADTV 6.2 5.6 6.5 7.5 6.7 51bps -75bps
Derivative ADTV 2.1 2.2 2.5 2.4 2.8 70bps 31bps
Total ADTV 2.2 2.3 2.6 2.6 3.0 76bps 35bps
Note: ADTV's are ex-prop. # Calculated Source: Company, HSIE Research
Treasury (Fund based)
Particulars (Rs mn) 1QFY21 1QFY20 YoY (%) 4QFY20 QoQ (%)
Revenues 1,485 339 338.1 (3,754) NM
PAT 1,303 350 272.3 (3,520) NM
Source: Company, HSIE Research
MOHFL
Particulars (Rs mn) 1QFY21 1QFY20 YoY (%) 4QFY20 QoQ (%)
NII 568 578 (1.7) 579 (1.9)
Other income 10 22 (54.5) 53 (81.1)
Total income 578 600 (3.7) 632 (8.5)
Expenses 210 239 (12.1) 231 (9.1)
PPoP 368 360 2.2 401 (8.2)
Provisions/write offs 127 111 14.4 120 5.8
PBT 241 249 (3.2) 281 (14.2)
PAT 111 170 (34.7) 176 (36.9)
Source: Company, HSIE Research
5 Quarters at a glance: MOHL
1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 YoY (%) QoQ(%)
Loan Book (Rs Bn) 43.0 38.5 37.8 36.7 36.9 (14.3) 0.5
Disbursement (Rs Bn) 0.3 0.5 0.6 0.5 0.2 (27.9) (48.3)
GNPL (%) 10.4 2.4 3.0 1.8 1.8 -860bps 0bps
NNPL (%) 7.8 1.8 2.3 1.4 1.3 -650bps -10bps
Provision Coverage Ratio (%) 42.0 62.0 53.0 66.0 66.0 2400bps 0bps
Source: Company, HSIE Research
Robust growth in ADTVs
resulted in 81.5/24.9%
YoY/QoQ growth in broking
revenues.
Market share in cash ADTV
declined 75bps sequentially
despite cash ADTV growing
29.5% QoQ.
MTM gain on investments
(mainly equity MFs)
resulted in a gain of Rs 1.3bn
vs. loss of Rs 3.5bn in
4QFY20.
Disbursements continue to
remain muted at Rs 0.2bn (-
27.9/-48.3% YoY/QoQ).
Loan book declined to Rs
36.9bn (8th consecutive qtr.
decline) as disbursements
were impacted by lockdown.
We believe that the scaling
up of MOHL will take time
and disbursements are
expected to remain muted
over 1HFY21.
Page | 5
Motilal Oswal Financial Services : Results Review 1QFY21
MF/PMS/AIF AUMs declined 1.5/18.0/21.5% YoY
Source: Company, HSIE Research
SIP market share
Source: Company, HSIE Research
IB revenues remained soft
Source: Company, HSIE Research
Total AUM grew ~18.2%
QoQ as markets displayed
sharp recovery.
SIP book size deceased for
MOAMC, however decline in
Industry SIP inflows was
higher leading to increase in
MOAMC’s market share.
IB profits continue to remain
weak despite a revenue
growth of 33.3% YoY; this
dragged capital market
profitability.
19
4
18
9
19
1
20
0
19
9
19
9
21
1
16
0
19
6
15
4
14
8
15
4
16
0
16
1
15
8
16
4
11
7 13
2
26
26
27
28
28
26
27
19
22
-
50
100
150
200
250
300
350
400
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
1Q
FY
21
MF AUM PMS AUM AIF AUM Rs bn
1.7
1.7
1.7
1.6
1.4
1.4
1.3
1.3
1.3
2.3 2.2 2.1 2.0
1.8 1.6 1.6 1.5
1.6
-
0.5
1.0
1.5
2.0
2.5
-
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
1Q
FY
21
Monthly SIP Inflows (Rs bn) - LHS SIP market share (%) - RHS
15
1
34
50
14
6
3
83
27
9 4
(34
.9)
(84
.8)
(88
.9) (3
1.1
)
(98
.0)
14
4.1
(46
.0)
(93
.8)
33
.3
(150.0)
(100.0)
(50.0)
-
50.0
100.0
150.0
200.0
0
20
40
60
80
100
120
140
160
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
1Q
FY
21
IB revenues (Rs mn) - LHS Growth YoY (%) - RHS
Page | 6
Motilal Oswal Financial Services : Results Review 1QFY21
Broking: Yield remains strong
Source: Company, HSIE Research
Broking ADTV's market share
Note: Ex-prop ADTV numbers are used to calculated market share.
Source: Company, HSIE research
MOHL: Disbursements remain muted
Source: Company, HSIE Research
Calculated broking yields
improved 0.2/0.3bps
YoY/QoQ as share of cash in
mix improved 223/224bps
YoY/QoQ.
Derivative and total ADTV
(ex-prop) market share
improved 31/35bps QoQ,
whereas share in cash ADTV
deteriorated by 75bps QoQ.
Lockdown impacted
disbursements.
16
1
18
9
17
2
17
4
18
9
22
2
25
1
27
5
28
5
3.1 2.9
2.6 2.5 2.2 2.3
2.6
2.6 3.0
1.0 1.0 0.8 1.0 0.9 0.8 0.9 0.8
1.1
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
-
50
100
150
200
250
300
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
1Q
FY
21
Broking ADTV (Rs bn) (ex prop) - LHS Calculated market share (%) - RHS
Calculated blended yield (bps) - RHS
5.35.7 5.7 5.5
6.25.6
6.5
7.56.7
3.0 2.82.5 2.4
2.1 2.2 2.5 2.4 2.8
3.1 2.92.6 2.5
2.2 2.3 2.6 2.63.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
1Q
FY
21
Cash ADTV Derivative ADTV Total ADTV
48.0 46.0 44.0 43.6 43.0 38.5 37.8 36.7 36.9
0.7 0.8 0.6 0.8 0.3 0.5 0.6 0.5 0.2 -
10.0
20.0
30.0
40.0
50.0
60.0
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
1Q
FY
21
Loan Book (Rs Bn) Disbursement (Rs Bn)
Page | 7
Motilal Oswal Financial Services : Results Review 1QFY21
MOHFL: NNPL declined to 1.3%
Source: Company, HSIE Research
Valuation
Base Case: sum of the parts valuation
Business segments Metric (Rs bn) Multiple
(x)
Valuation (Rs bn) Valuation (Rs/share)
FY21E FY22E FY23E FY21E FY22E FY23E FY21E FY22E FY23E
Broking and
distribution PAT 1.86 2.00 2.07 15.0 27.9 30.0 31.1 188 203 210
AMC (Public and
private) PAT 1.51 1.91 2.27 30.0 45.2 57.4 68.1 305 388 460
Investments/
Treasury
MTM
value 22.34 23.03 28.56 0.7 15.6 16.1 20.0 106 109 135
Housing finance ABV 8.93 9.90 11.04 0.5 4.5 4.9 5.5 30 33 37
Total
93.1 108.5 124.7 629 733 842
Less: intersegment
-0.19 -0.14 -0.19 22.5 -4.2 -3.2 -4.2 -28 -21 -28
Total
88.9 105.4 120.5 601 711 814
Source: Company, HSIE Research
We maintain our Mar-21E
TP at Rs 715/share.
6.8
7.0
8.7
9.3
10
.4
2.4
3.0
1.8
1.8
5.6
5.6
7.0
7.2
7.8
1.8
2.3
1.4
1.3
-
2.0
4.0
6.0
8.0
10.0
12.0
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
1Q
FY
21
GNPL (%) NNPL (%)
Page | 8
Motilal Oswal Financial Services : Results Review 1QFY21
Assumptions Financial summary: Broking, IB and distribution (includes wealth management)
(Rs mn) FY19 FY20 FY21E FY22E FY23E
Total revenue 11,665 11,865 12,819 13,518 14,132
EBITDA 3,023 2,709 2,668 2,866 2,971
PAT 1,750 1,899 1,857 2,000 2,075
Broking revenues 8,278 8,985 9,902 9,551 9,456
Growth (%) 4.0 8.5 10.2 (3.5) (1.0)
Broking yields (bps) calculated 1.9 1.5 1.5 1.3 1.2
Broking ADTV (Rs bn) 174 235 273 289 318
Growth (%) 27.2 35.1 16.0 6.0 10.0
Distribution revenues 1,084 1,093 967 1,129 1,302
Growth (%) (24.2) 0.9 (11.6) 16.8 15.4
Distribution AUM (Rs bn) 96 90 104 116 130
Growth (%) 27.5 (6.3) 15.0 12.0 12.0
Yield (%) 1.3 1.2 1.0 1.0 1.1
Spread income 821 630 688 1,131 1,241
Growth (%) 21.1 (23.3) 9.3 64.3 9.8
Spreads on funding (%) 4.2 1.7 6.8 7.0 7.0
Interest income
-T+5+LAS+MTF book 1,770 1,870 1,311 1,467 1,579
-Liened investments 178 272 476 544 622
Book Size (T+5+LAS+MTF) 15,270 8,000 9,480 10,082 10,973
Liened investments 7,021 7,588 8,733 9,972 11,427
Yield (%) 3.8 3.3 4.1 5.9 5.8
Wealth Management
Revenue 1,088 1,007 1,095 1,399 1,764
Growth (%) 9.7 (7.4) 8.8 27.7 26.1
Wealth AUM (Rs bn) 175 156 203 245 294
Growth (%) 18.9 (10.7) 29.8 20.7 19.9
Net Sales (Rs bn) 24 19 15 18 19
Yield (%) 0.68 0.58 0.61 0.63 0.66
Investment banking
Revenue 371 121 133 266 319
Growth (%) (67.3) (67.4) 10.0 100.0 20.0
Other revenues 24 29 35 41 50
Source: Company, HSIE Research
Page | 9
Motilal Oswal Financial Services : Results Review 1QFY21
Financial summary: asset management and private equity (Rs mn) FY19 FY20 FY21E FY22E FY23E
Total revenue 6,851 6,630 5,523 6,967 7,674
EBITDA 2,873 2,497 2,118 2,683 3,190
PAT 1,799 1,820 1,505 1,915 2,269
1) Asset management (public equities)
Revenue 5,747 5,561 4,516 5,683 6,309
Growth (%) 11.1 (3.2) (18.8) 25.8 11.0
AUM (Rs bn)
Mutual fund 200 160 203 253 303
PMS 160 117 151 170 197
AIF 28 19 23 13 5
AUM growth (%)
MF 10.1 (20.0) 27.2 24.2 19.8
PMS 7.0 (26.9) 28.8 12.7 15.8
AIF 15.8 (32.1) 19.0 (42.2) (61.4)
As % of AAUM (bps)
Revenues 155 163 134 140 134
Staff expenses 13 16 14 12 12
Brokerage expenses 66 68 55 60 58
Admin and other opex 11 18 13 12 12
Total exp 90 101 82 85 81
EBITDA 65 61 52 55 53
EBIT 62 61 51 54 53
NOPLAT 40 47 38 40 39
PBT 62 61 51 54 53
PAT 40 47 38 40 39
2) Private equity and real estate funds
Revenue 1,104 1,069 1,008 1,284 1,365
Growth (%) (16.5) (3.2) (5.8) 27.4 6.3
Fee income 1,016 1,069 998 1,184 1,215
% of AuM 1.8 1.7 1.5 1.6 1.5
Carry income 88 - 10 100 150
AUM (Rs bn) 64 65 68 80 82
Growth (%) 36.3 1.6 4.6 17.6 2.5
Source: Company, HSIE Research
Treasury (fund-based)
(Rs mn) FY19 FY20 FY21E FY22E FY23E
Revenue 702 -2,585 3,216 1,887 2,062
EBITDA 724 -2,605 3,195 1,866 2,041
PAT 723 -2,121 2,971 1,716 1,897
AUM (Rs bn) 25.1 36.3 22.3 23.0 28.6
Yield (%) 3.1 (8.4) 11.0 8.3 8.0
Source: Company, HSIE Research
Page | 10
Motilal Oswal Financial Services : Results Review 1QFY21
Financials Income statement (ex-MOHL) (Rs mn) FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E
Net Revenues 7,944 12,555 19,837 17,186 13,943 18,756 19,463 21,004
Growth (%) 9.9 58.1 58.0 (13.4) (18.9) 34.5 3.8 7.9
Employee Benefits Expenses 2,277 3,129 4,129 4,380 4,771 5,105 5,871 7,045
Operating Expenses 3,711 5,101 7,945 6,675 6,901 6,308 6,696 6,413
EBITDA 1,956 4,325 7,762 6,131 2,271 7,342 6,896 7,546
EBITDA Margin (%) 24.6 34.5 39.1 35.7 16.3 39.1 35.4 35.9
EBIDTA Growth (%) (11.9) 121.2 79.5 (21.0) (63.0) 223.3 (6.1) 9.4
Depreciation 339 295 311 195 329 395 474 569
EBIT 1,616 4,030 7,452 5,936 1,941 6,947 6,422 6,978
Other Income (includes treasury ) 15 (232) (271) - - - - -
Interest & Financial Charges - - - - - - - -
PBT 1,632 3,798 7,180 5,936 1,941 6,947 6,422 6,978
Tax 399 975 1,872 1,872 480 900 1,022 1,005
RPAT 1,233 2,823 5,308 4,064 1,462 6,048 5,401 5,973
APAT 1,290 2,984 5,543 4,101 1,142 5,721 5,077 5,647
APAT Growth (%) (8.8) 131.3 85.7 (26.0) (72.2) 401.1 (11.3) 11.2
AEPS 9.0 20.6 37.7 27.6 7.7 38.6 34.2 38.1
EPS Growth (%) (10.0) 129.5 83.4 (26.7) (72.2) 401.1 (11.3) 11.2
Source: Company, HSIE Research
Balance Sheet (ex-MOHL) (Rs mn) FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E
SOURCES OF FUNDS
Share Capital 142 145 145 146 148 148 148 148
Reserves 13,791 16,213 26,323 28,131 28,054 31,596 34,656 38,123
Minority Interest 162 285 354 408 366 422 460 488
Total Shareholders Funds 14,094 16,643 26,822 28,685 28,568 32,165 35,264 38,759
Long-term Debt 1,000 2,500 2,000 15,283 16,786 10,000 12,000 12,000
Short-term Debt 6,950 10,187 12,283 - - - - -
Total Debt 7,950 12,687 14,282 15,283 16,786 10,000 12,000 12,000
Other Financial Liabilities & Provisions 691 1,092 1,749 1,167 1,228 1,542 1,600 1,726
Other Non Current Liabilities 32 17 17 - - - - -
Net Deferred Tax Liability 65 334 1,434 1,007 88 93 99 104
TOTAL SOURCES OF FUNDS 22,831 30,772 44,304 46,141 46,670 43,800 48,963 52,590
APPLICATION OF FUNDS
Net Block 2,885 2,791 2,864 2,528 2,828 2,620 2,341 1,983
Non current Investments 13,612 18,080 29,827 32,868 36,898 34,248 37,249 40,628
Loans & Deposits 463 1,269 1,342 1,899 2,534 5,139 5,332 5,755
Other Non Current Assets 1,032 36 185 - - - - -
Total Non-current Assets 17,992 22,177 34,218 37,295 42,260 42,007 44,922 48,365
Current Investments 16 1,650 3,466 (155) 347 21 22 24
Debtors 7,055 12,511 10,358 15,704 7,457 8,993 10,131 8,632
Inventories 0 2 3 - - - - -
Cash & Equivalents 2,673 2,981 3,619 6,065 12,618 2,544 1,192 4,488
Loans & Advances 3,097 3,150 8,772 6,858 5,586 5,139 5,332 5,179
Other Current Assets 35 103 120 (831) (204) - - -
Total Current Assets 12,877 20,398 26,338 27,642 25,803 16,695 16,678 18,323
Creditors 5,862 10,087 13,185 13,872 17,974 10,277 8,265 8,920
Other Current Liabilities 2,174 1,715 3,067 4,925 3,419 4,625 4,373 5,179
Total Current Liabilities 8,036 11,802 16,252 18,796 21,393 14,902 12,638 14,099
Net Current Assets 4,841 8,595 10,086 8,846 4,410 1,794 4,041 4,224
TOTAL APPLICATION OF FUNDS 22,833 30,772 44,304 46,141 46,670 43,800 48,963 52,590
Source: Company, HSIE Research
Page | 11
Motilal Oswal Financial Services : Results Review 1QFY21
Cash Flow (ex-MOHL) (Rs mn) FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E
Reported PBT 1,632 4,076 7,508 5,936 1,941 6,947 6,422 6,978
Non-operating & EO Items 273 (527) (1,002) (40) - - - -
Interest Expenses - - - - - - - -
Depreciation 339 295 311 195 329 395 474 569
Working Capital Change 3,597 2,332 4,628 (13,501) 9,997 (10,069) (3,727) 2,824
Tax Paid (399) (975) (1,872) (1,872) (480) (900) (1,022) (1,005)
OPERATING CASH FLOW ( a ) 5,442 5,201 9,571 (9,282) 11,788 (3,626) 2,147 9,365
Net Capex (232) (201) (384) 141 (629) (188) (195) (210)
(Purchase)/sale of net operating financial assets (4,188) (6,102) (7,067) 660 (4,789) 2,705 (3,287) (3,680)
Free Cash Flow (FCF) 1,021 (1,102) 2,120 (8,481) 6,370 (1,109) (1,334) 5,475
Investments - - - - - - - -
Non-operating Income
INVESTING CASH FLOW ( b ) (4,420) (6,303) (7,451) 801 (5,418) 2,517 (3,482) (3,890)
Debt Issuance/(Repaid) (500) 1,500 (500) 13,283 1,503 (6,786) 2,000 -
Interest Expenses - - - - - - - -
FCFE 521 398 1,620 4,802 7,873 (7,895) 666 5,475
Proceeds From Issue of Share Capital 362 429 208 183 - - - -
Dividend (766) (518) (1,190) (1,524) (826) (2,492) (2,242) (2,432)
Others - - - (1,014) (495) 313 225 252
FINANCING CASH FLOW ( c ) (904) 1,411 (1,483) 10,928 183 (8,965) (17) (2,179)
NET CASH FLOW (a+b+c) 117 310 638 2,447 6,553 (10,074) (1,351) 3,296
Opening Cash & Equivalents 2,554 2,673 2,981 3,619 6,065 12,618 2,544 1,192
Closing Cash & Equivalents 2,671 2,982 3,619 6,065 12,618 2,544 1,192 4,488
Source: Company, HSIE Research
Key Ratios (ex-MOHL)
FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E
PROFITABILITY (%)
EBITDA Margin 24.6 34.5 39.1 35.7 16.3 39.1 35.4 35.9
EBIT Margin 20.3 32.1 37.6 34.5 13.9 37.0 33.0 33.2
APAT Margin 16.2 23.8 27.9 23.9 8.2 30.5 26.1 26.9
RoE 9.6 19.7 25.9 15.0 4.0 19.1 15.3 15.5
Core RoCE 7.2 19.7 25.9 15.0 4.0 19.1 15.3 15.5
RoCE 9.1 19.8 25.7 14.8 5.2 20.2 16.2 16.3
EFFICIENCY
Tax Rate (%) 24.5 25.7 26.1 31.5 24.7 12.9 15.9 14.4
Asset Turnover (x) 2.8 4.5 6.9 6.8 4.9 7.2 8.3 10.6
Inventory (days) 0 0 0 0 0 0 0 0
Debtors (days) 324 364 191 334 195 175 190 150
Other Current Assets (days) 2 3 2 -18 -5 0 0 0
Payables (days) 269 293 243 295 471 200 155 155
Other Current Liab & Prov (days) 100 50 56 105 90 90 82 90
Working Capital (days) -43 24 -106 -83 -370 -115 -47 -95
Debt/EBITDA (x) 4.07 2.93 1.84 2.49 7.39 1.36 1.74 1.59
Net D/E 0.4 0.6 0.4 0.3 0.1 0.2 0.3 0.2
PER SHARE DATA
AEPS (Rs/sh) 9.0 20.6 37.7 27.6 7.7 38.6 34.2 38.1
CEPS (Rs/sh) 11.4 22.9 40.4 29.7 10.2 42.3 38.4 42.9
DPS (Rs/sh) 3.5 5.5 8.5 5.7 4.1 14.3 12.9 14.0
BV (Rs/sh) 99.1 115.2 184.9 196.9 192.9 217.2 238.1 261.7
VALUATION
P/E 72.3 31.5 17.2 23.4 84.2 16.8 18.9 17.0
P/BV 6.7 5.7 3.6 3.4 3.4 3.0 2.8 2.5
EV/EBITDA NM 12.4 15.6 42.3 13.1 13.9 12.7 11.6
OCF/EV (%) 5.4 5.4 10.0 (9.7) 12.3 (3.8) 2.2 9.8
FCF/EV (%) 1.0 (1.1) 2.2 (8.8) 6.6 (1.2) (1.4) 5.7
FCFE/MCAP (%) 0.5 0.4 1.7 5.0 8.2 (8.2) 0.7 5.7
Dividend Yield (%) 0.5 0.8 1.2 0.8 0.6 2.1 1.9 2.0
Source: Company, HSIE Research
Page | 12
Motilal Oswal Financial Services : Results Review 1QFY21
Rating Criteria
BUY: >+15% return potential
ADD: +5% to +15% return potential
REDUCE: -10% to +5% return potential
SELL: > 10% Downside return potential
Date CMP Reco Target
2-Aug-19 499 NEU 545
22-Sep-19 627 NEU 689
14-Oct-19 587 NEU 641
25-Oct-19 601 NEU 645
9-Jan-20 850 SELL 710
11-Jan-20 889 SELL 711
23-Jan-20 889 SELL 711
2-Mar-20 745 ADD 900
21-Apr-20 538 BUY 668
13-May-20 502 BUY 633
13-Jul-20 672 ADD 715
3-Aug-20 671 ADD 715
From 2nd March 2020, we have moved to new rating system
RECOMMENDATION HISTORY
450
500
550
600
650
700
750
800
850
900
Au
g-1
9
Sep
-19
Oct
-19
No
v-1
9
Dec
-19
Jan
-20
Feb
-20
Ma
r-2
0
Ap
r-2
0
Ma
y-2
0
Jun
-20
Jul-
20
Au
g-2
0
MOFS TP
Page | 13
Motilal Oswal Financial Services : Results Review 1QFY21
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