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Motilal Oswal Financial Services Ltd

Investor Presentation | Jun 2016

BSE: 532892 ● NSE: MOTILALOFS ● Bloomberg: MOFS:IN ● Reuters: MOFS.BO ● www.motilaloswalgroup.com

Efforts into building “right-to-win”……………..leading to tangible business results

Focus

Strategy

Performance

Industry

Focus: Recent business transformation & drivers of long-term ROE growth

Strategy

Performance

Industry

Current business mix is across the financial services spectrum

4

Building a mix of capital market-based, asset-based & fund-based businesses in financial services

Asset-based Businesses

• Asset Management

• Private Equity

• Wealth Management

Power of entrepreneurship Customer-centricity Competitive advantages Judicious use of capital

• Retail Broking & Distribution

• Institutional Equities

• Investment Banking

Capital Market-based Businesses

• Affordable Housing Finance

• Sponsor Commitments

Fund-based Businesses

Pre-2007 vintage

Historical growth phases & Setting up the stage now

5

Milestones achieved

Public Market Equities (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)

Public Market Equities

(Mutual Funds)

Sponsor Commitments (to our own MF & PE

funds)

Asset Management (Offshore)

• Positioning on research & advisory

• 10x growth in PAT in FY03-08 cycle

• 3x growth in market share

• 10x growth in client base

• Diversification around the core

• Investment phase

• Stable margins

• Profitability intact

• Low RoE

• Quality mortgage biz, poised for scale

• Asset-businesses poised for scale

• Established track record in PE

• Broking has huge operating leverage

• Free cash flows deployed to “seed

businesses” & generate 20%+ ROE

Capital market-based businesses

Asset-based businesses

Fund-based businesses

Since2007

Since2014

Transforming the business model to build 4 engines of ROE growth

6

From 1987 to 2013: Building a solid agency business Strategic realignment from 2013: 4 engines of ROE growth

Equity research & advice was the core USP since 1987

Extended this competence to active-investing with PMS

Expanded into related businesses (WM, IB, PE) in 2007

Used minimal capital, but sizable net worth still needed

Started affordable housing finance biz: 1st engine of ROE

New mutual funds on QGLP philosophy: 2nd engine of ROE

Reinvested in capital market businesses: 3rd engine of ROE

Commitments to own MF & PE funds: 4th engine of ROE

Where we stood as of FY2016

7

● All-time high of last 10 years

● 32% CAGR in last 3 years

● Mix shifting towards asset-

based & housing finance biz

● Reducing reliance on capital

market-based biz

● Near all-time high of last 10 years

● 16% 3-Yr CAGR in last 3 years

● Invested in people, tech & network

● Housing finance would reduce

volatility, while capital mkt biz

offers scope for operating leverage

* On Face Value of Re 1 per shareData as of Mar 2016

Rs 11 bn

in FY2016

Revenues

Rs 1.7 bn

in FY2016

PAT

● Long-term ROE target of 20%+

● Excludes Rs 1.8 bn unrealized

gains on our MF commitments

● Net worth Rs 14 bn in FY16

● High dividends: Rs 3.5 in FY16*

● Mkt Cap near all-time high

● ~15% institutional holding

● 1.7X D/E in acceptable-range

● Rising market share in net sales

● 122% 3-Yr CAGR in MF AUM

● 63% 3-Yr CAGR in PMS AUM

● 29% 3-Yr CAGR in PE AUA

● Apart from these, other AUM

includes Rs 256 bn in DP assets,

Rs 64 bn in Wealth, Rs 21 bn HFC

loan book & Rs 26 bn in MF Distt

12.4%

in FY2016

ROE

Rs 133 bn

in FY2016

AUM (MF, PMS, PE)

Well-positioned across the client pyramid

8

Affordable Housing Loan Families

Retail Broking & Distribution Clients

HNI Wealth Families

Institutions

AMC Distributors

Corporates

25,000+

800,000+

1,700+

600+

2,300+

100+ deals

Data as of Jun 2016

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

9

● 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.

Focus

Strategy: Building a “right-to-win” in each business

Performance

Industry

Business-wise strategic imperatives

Capital

Market-

based

businesses

Asset-

based

businesses

11

Fund-

based

businesses

Retail Broking & Distribution

Institutional equities

Investment banking

Maintain its established positioning in research & advisory

Build scale by expanding the network and deepening product distribution

Leverage on digital models for ‘next-generation’ retail clients

Pitch its strength in research products as the main USP

Focus on building competencies in sales, trading, blocks & corporate outreach

Partner with SME corporate clients as a ‘strategic CFO’

Leveraging on the emerging equity capital raising opportunities

Private equity

Public market equities

Wealth management Deepening relationships with HNIs with AUM-advisory mandates

Customized advisory & a wide product suite for holistic asset allocation

Equity -specialist positioning with time-tested QGLP investing philosophy

Build a strong B2B distribution base, across domestic & offshore

Capture fundamentally-strong, high-quality & high-growth companies

Stringent due diligence to assess projects by established developers

Affordable housing finance

Sponsor commitments

Build a scalable, high-ROE business, backed by operational excellence

Focus on underwriting, technology & risk, as on scale & productivity

Leveraging our time-tested investment philosophy by committing to own

MF & PE funds; Commitment to build the new housing finance venture

12



• Private Equity









Retail Broking: Time-tested retail model poised for scale

13

Relationship-

based advisory

creating stickier

client engagement

Profile-based

advisory backed by

dedicated-desks

Leveraging

technology

for speed, access,

cost & convenience

Portfolio-based

pitch, instead of

just pitching stocks

Leverage power

of entrepreneurship

with franchisees

Research

customized for retail;

Advisor certifications

to ensure quality

Asset-based

product distribution

to build AUM & trail

Retail Broking: Efforts leading to business results

14

● Focus on client addition leading to strong run-rate

● Increasing advisors across desks to deepen client engagement

● System-driven tools to attract DIY clients

● Focus on product distribution, commodity & currency businesses

Traction in

Client Addition

● Deepening digital business, by focusing on speed, convenience & experience

● Tech-based tools for business partners, apart from seminar-support

● Automating back-end processes for faster turnaround

● These will help as market volume consolidates to larger brokers in bull-phases

Focus on

Operational Initiatives

● Improved retail market share across cash and derivative segments

● Retail clients added per month in FY2016 double of that in FY2014

● Digital platforms delivering on speed, access & convenience

● Implemented e-KYC with the 15 min trading & demat A/C, to reduce on-boarding time

● Building long-term relationships with franchisees helped them grow their business manifold

● Won Best National Financial Advisor award at UTI-CNBC TV18 Financial Advisor Awards for the 5th time

Business

Wins

3,616

4,599

Q1FY16 Q1FY17

Retail Clients added per month

1.3X

232

298

Q1FY16 Q1FY17

Depositary Assets (Rs Bn)

1.3X

Data as of Jun 2016

Institutional Equities: Focus on research, sales, trading & outreach

15

●Adding high-conviction

ideas under coverage

● Introduced new products

like videos, Voices, Ind-AS

●Adding new empanelment

● Focus on expanding market

share in offshore geographies

● Invested into Algos/Quants

●Multiple corporate access

formats to connect with

companies/experts/govt.

●AGIC is one of the largest

events in this segment

●Ranked 1 in Events/ Conf.,

Top-2 for Sales Services &

Roadshows/Company Visits,

Top-3 in Local Brokerage &

Execution at AsiaMoney 2015

FII/DII Clients

601

Coverage

231

AGIC Event

4,000+ meetings

Consistently

ranked high

● Blocks comprise a healthy share of volumes; & have steadily increased since recent years

● Research continues to win regularly at award forums

● Creating access with who’s-who in government/corporates

● Continues to be ranked amongst the top local brokers across parameters in prestigious award forums

Business

Wins

Data as of Jun 2016

Award-winning

Research

Investing in

Sales &

Execution

Multiple formats

for OutreachBest in Class

Institutional Broking

Business

Wins

Investment Banking: Focusing on emerging opportunities

16

● Participating in emerging ECM opportunities

● Worked on some IPOs & QIPs in recent months, & also received clearance for some upcoming IPOs

● In advanced stage discussions for raising private equity for firms in IT, consumer & services sectors

● IPO and QIP pipeline is gathering steam, after the new team was put in place

Investment banking services across the ECM spectrum

Business

Wins

17



• Private Equity









Traction in

Distributor base

Asset Management: Positioned as a niche equity specialist

Equity MF Net Sales Market Share*

4.0% in Q1FY17

vs 2.2% in Q1FY16

Equity MF Avg AUM Market Share*

1.3% in Q1FY17

vs 0.7% in Q1FY16

AUM (MF & PMS)

Rs 123 bn

68% YoY

18

● Amongst the fastest growing AMCs in the equity space

● Our industry rank based on Equity AUM was 12 in Q1FY17, up from 14 in FY15 & 18 in FY14

● Despite a slowdown in net flows in the industry in the recent quarter, our net inflows remained

strong along with improvement in market share – shows acceptance of our QGLP philosophy

● Our time-tested QGLP investment philosophy has helped us identify several multibaggers

● Our flagship Value PMS delivered 25% CAGR in 13 yrs & NTDOP PMS delivered 17% CAGR since 2007

Track-record of

QGLP Philosophy

● Deepening B2B distributor relationships across banks, wealth firms, IFAs & national distributors

● Onboarding new marquee distributors, while also deepening existing relationships

Distributors

43% YoY

Data as of Jun 2016

An investment-process focused B2B sales firm mutual fund & PMS products in the equities space

Business

Wins

Private Equity: Demonstrated track-record helping new fundraise

19

● 1st Growth Capital Fund (IBEF I): $125 million in 13 deals. 4 full-exits & 4 partial exits translate to

~198% capital returned (INR terms). It is in advanced stages for 3 exits in next few months, &

expects to divest the balance companies in FY17/18

● 1st Real Estate Fund (IREF I): Rs 2 billion AUA in 7 deals, of which full/partial exits have been done

from 6 projects so far, translating into ~86% capital returned to investors

Funds in

Exit mode

Funds in

Investing mode

● 2nd Growth Capital Fund (IBEF II): Rs 9.5 billion raised, including commitments from marquee

institutions like IFC, Squadron & Axiom. It has committed ~64% across 8 investments so far

● 2nd Real Estate Fund (IREF II): Rs 4.9 billion assets raised, of which it has committed ~85% across

established developers in 8 deals following stringent due diligence process

● 3rd Real Estate Fund (IREF III): Announced 1st close raising commitments of ~Rs 6 billion

Investment manager & advisor to private equity funds; acts as advisor & mentor to investee companies

● Established track-record in the growth capital space, leading to fund-raise from institutions

● The 1st growth capital fund is likely to deliver a gross multiple of ~3.5x

● Healthy traction in speed of fundraising in the new funds in the real estate space

Business

Wins

Data as of Jun 2016

Business

Wins

Private Wealth: Focus on relationships, products and yields

20

● Ramped up the RM base as it is key to scale up AUM; 75 RMs as of Jun 2016 vs. 54 in Jun 2015

● Traction in RMs resulted in growth in AUM mandates & new client addition

● Training programmes to enhance knowledge/service levels & develop a solutions-oriented approach

Hiring Quality

Talent

● Open-architecture suite along with in-house manufacturing of higher-yield equity & real estate products

● Product penetration is improving, which is reducing the risk of concentration

● Property Advisory team held the Real Estate Expo, showcasing projects of marquee developers

Holistic mix of

Products

Traction in AUM-mandates

Improvement in RM productivity

Client Families

28% YoY

RM team

39% YoY

● Earns a higher yield on its AUM than most peers, due to higher share of equity & real estate in the mix

● The business turned significantly profitable last year

● Ramped up the RM base without compromising throughput – improving productivity

● Traction in AUM-mandates and deepening of client wallet-share

Business

Wins

Data as of Jun 2016

Wealth Mgt AUM

Rs 74 bn

54% YoY

Business

Wins

Business

Wins

21



• Private Equity









Aspire Home Finance: Building a stable, high ROE business

22

● QoQ traction in disbursals remains strong ; Disbursals for last 12 months was Rs 21 billion

● Loan book stands at ~ Rs 25 billion across ~25,000 families – Average ticket-size of Rs 1 million

● Investments in Branches (up 28 to 62 YoY) & Employees (up ~200 to ~600 YoY) should push volumes

Traction in

Assets

● Term-loan drawdown from 23 banks & 1 NBFC as of Jun 2016, up from 8 a year ago

● Approx 54% of borrowings are from capital markets via NCDs

● Delivered positive PAT in its first year and Rs 400 mn PAT in its second year of operations

● Ratings of Crisil A+/Stable & ICRA AA- (Stable) augur well for future fund-raise

● As of Q1FY17, RoA was 3.5%, RoE was 16.6% & D/E was 5.7X

Business

Wins

Gross NPL0.2% in Jun 2016

vs 0.2% in Mar 2016

Banks given LOCs*

24 in Jun 2016

vs 8 in Jun 2015

Aspire NIM~380 bp in Q1FY17 vs ~389 bp in FY16

Traction in

Liabilities

● Placed as much focus on underwriting, file audit & risk management, as much on scale & productivity

● Technology implemented at each stage of the loan approval process to reduce turnaround-time

● Focusing on Property Services and Insurance sales to complement Other Income

Focus on

Operations

HFC Loan Book

Rs 25 bn

4.5X YoY

Data as of Jun 2016

Focused on the affordable housing finance segment targeting the middle/low income Indian households

Business

WinsBusiness

Wins

Fund based activities: Focused on enhancing Return on Equity

23

MOFSL made strategic allocation of capital to grow RoE sustainably to 20%+. These include commitments

to Aspire Home Finance & sponsor commitments to our own mutual fund & private equity funds

● Our investments in Motilal Oswal’s mutual fund products stood at Rs 6.1 billion

● Unrealized gain on MF investments was Rs 1.8 billion, which is not reflected in the P/L account

● Our investments in Motilal Oswal’s alternative investment products stands at Rs 1.9 billion

● Deployment into Aspire Home Finance was Rs 4.0 billion till Jun 2016

Sponsor Commitments

NBFC Business

● NBFC loan book was Rs 2.6 billion

● LAS lending business, earlier done from equity capital, is now being run as a spread business

● These not only helped us “seed” the new businesses by investing in highly scalable opportunities, but

they also represent “resources” available to use for future investments, if required

● Track-record of our QGLP philosophy seen across cycles; re-affirms our belief in our investing prowess

● Aspire turned profitable in its 1st year & contributed meaningfully to Group PAT in its 2nd year

Business

Wins

*Disclosure: Value PMS Strategy Inception Date: 24/03/2003 and NTDOP PMS Strategy Inception Date: 11/12/2007. These strategy returns are of a Model Client as on 30th June 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 above 1 year are annualized and below 1 year are absolute. Strategy returns shown above are post fees &expenses

Business

Wins

Business

Wins

Business

Wins

Focus

Strategy

Performance: Financials, new drivers of growth & capital allocation

Industry

1% 2% 1% 1%

17% 21% 20% 14% 10%

3%20%11% 13% 16% 16%

20%2%

2% 1% 2%

2%69% 63% 61% 63%

47%

FY12 FY13 FY14 FY15 FY16

Broking & operating income Investment banking fees

Asset management fees Housing Finance

Funds based business Others

Net Worth (Rs million)PAT (Rs million)

Annual financial performance

*Prior figures have been regrouped wherever necessary 25• Payout is calculated on Adjusted PAT for the respective years

Revenues (Rs million)

Revenue Composition (%)Consistent dividendsReturn on Equity (%)

4,711 4,729 4,681

7,750

10,937

FY2012 FY2013 FY2014 FY2015 FY2016

13%

Latest quarter performance

26

Particulars Q1 FY17 Q4 FY16 Q1 FY17 Q1 FY16 FY16

Rs million Jun 30,

2016

Mar 31,

2016

Jun 30,

2016

Jun 30,

2015

Mar 31,

2016 Brokerage & operating income 1,431 1,265 13% 1,431 1,163 23% 5,091

Investment banking fees 82 84 -2% 82 49 69% 242

Asset management fees 652 653 0% 652 403 62% 2,235

Fund based Income 459 247 86% 459 284 61% 1,124

Housing finance related 1,002 908 10% 1,002 204 391% 2,195

Other income 24 12 96% 24 13 86% 50

Total Revenues 3,650 3,169 15% 3,650 2,116 72% 10,937

Operating expenses 711 589 21% 711 474 50% 2,325

Personnel costs 687 714 -4% 687 582 18% 2,510

Other costs 396 441 -10% 396 363 9% 1,639

Depreciation 73 94 -22% 73 76 -4% 349

Interest 832 654 27% 832 226 267% 1,738

Exceptional items 112 0 nm 112 0 nm 0

PBT 1,063 676 57% 1,063 394 170% 2,376

Tax 247 197 26% 247 104 137% 657

Minority Interest 24 8 201% 24 6 323% 28

Reported PAT 792 472 68% 792 284 179% 1,691

EPS - Basic 5.5 3.3 5.5 2.0 11.9

EPS - Diluted 5.5 3.3 5.5 2.0 11.7

No.of shares outstanding

(million) - FV Rs 1/share143 142 143 141 142

Change

(%)

Q-o-Q

Change

(%)

Y-o-Y

Newer drivers for topline & profit growth

27

• During the previous cycle, our growth was driven by only one engine, i.e. the traditional capital market business. That alone

helped us deliver 10x growth in profits through the last cycle

• Now, we have 4 drivers - the traditional capital market business, asset management businesses, housing finance business &

fund based activities; which should help us capture the growth opportunities & improve our long-term ROE

4 drivers for future profitability

35%33%

71%

26%25%

14%16%23%

2% 23%19%13%

YTD FY17FY16FY15

Fund based

Housing Finance

Asset & Wealth Management

Capital Markets

1,691 7921,436

Housing Finance and Asset Management business led YoY growth in revenues

PAT - Mix change; rising proportion of Housing Finance and Asset Management

2,116

3,650

Q1FY16 Broking & Related

HFC related

AMC Fee (incl PE)

Fund based

IB Fee Others Q1FY17

268

249 34 11174

798

● Capital Markets includes retail broking & distt., institutional equities & investment banking● Asset Management includes asset management, private equity & wealth management● Housing Finance includes Aspire Home Finance● Fund based includes sponsor commitments to our AMC products and NBFC LAS book

How the capital allocation has changed after the transformation

28

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

FY2016: ~Rs 14 billion net worth

Allocation to capital market business & corp. office continues

LAS to be run as spread biz; arbitrage book also closed down

Rs 3 billion in affordable home finance, which can increase

Rs 8 billion in our MF & PE funds: Shows our own conviction

This allocation is geared to 20%+ ROE in long-term

Recent awards

‘Best Capital Markets & Related NBFC’ award at

CNBC TV18 India Best Banks & Financial Institutions

Awards 2011

‘Most Innovative Fund of the Year’ award at the

CNBC TV18-CRISIL Mutual Fund Awards 2011 for the

M-50 ETF

'Best Performing National Financial Advisor Equity Broker' award at

CNBC TV18 Financial Advisor Awards for 5th time

Investment Banking bagged ‘Asia Pacific Cross-Border Deal

of the Year’ & ‘India M&A Investment Banker’ awards

‘Best Equity Broker’ award at Bloomberg UTV

Financial Leadership Awards 2012

Private Equity won ‘Best Growth Capital Investor-

2012’ award at the Awards for PE Excellence 2013

Nasdaq 100 ETF won the ‘Most Innovative ETF Asia

Pacific 2011’ award at the 8th Annual Global ETF Awards

2012 in USA

Adjudged amongst Top 20 innovators in BFSI space at

the Banking Frontiers Finnovity Awards 2012

‘Best Research as Research Showcase Partner’ at Research

Bytes IC Awards 2014

Retail Broking & Distribution, Institutional Equities & Wealth Management

NBFC, Asset Management, Private Equity & Investment Banking

29

CNBC TV18 Financial Advisor Awards 2015 for the HNI wealth-distributor category

Focus

Strategy

Performance

Industry Trends: Rationale for India’s savings story remains strong

• 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…

31

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

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%

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

Nominal GDP (Current Price) - YoY Change

Gross National 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

32

……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%

Mal

aysi

a

Ind

ia

Ind

on

esia

Ch

ina

USA

Mex

ico

Ger

man

y

Jap

an

Ru

ssia UK

Ko

rea

Sou

th A

fric

a

Bra

zil

Previous 5-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

FY2

00

1

FY2

00

2

FY2

00

3

FY2

00

4

FY2

00

5

FY2

00

6

FY2

00

7

FY2

00

8

FY2

00

9

FY2

01

0

FY2

01

1

FY2

01

2

FY2

01

3

FY2

01

4

FY2

01

5

Difference between WPI Inflation % and Per Capita GNP (constant price)

Changes in Financial Assets in Shares & Debentures (Rs Bn)

0.73%

0.58% 0.57% 0.57%0.54%

0.87%

0.80%

0.75%

0.80%

0.77%

Mar-11 Mar-12 Mar-13 Mar-14 Mar-15

Gross NPA% for Housing Loan segment for HFCs

Gross NPA% - Overall for HFCs

7%

17% 20%26% 29%

32%

39%48%

81%88%

Ind

ia

Thai

lan

d

Ch

ina

Ko

rea

Mal

aysi

a

Sin

gap

ore

Taiw

an

Ger

man

y

UK

USA

Housing Finance holds ample potential; Moving from banks to HFCs

Source: ICRA

Source: ICRA

Source: ICRA

Source:: ICRA 33

1.3 1.7 2.1 2.7 3.2 3.94.43.2

3.8 4.2 4.8

5.7 6.6

7.5

Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16

HFC Banks

Housing Credit 6-Year CAGR: 18%

Banks Housing Credit 6-Year CAGR: 15%

HFCs Housing Credit 6-Year CAGR: 22%

4.5

11.9

8.910.5

7.56.3

5.5

30% 31% 34% 36% 36% 37% 37%

70% 69% 66% 64% 64% 63% 63%

Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16

% of HFC % of Banks

Despite clocking rapid growth, India is still a relatively underpenetrated mortgage market – shows the latent opportunity

Apart from the opportunity itself, this is also a lower-risk market, especially the pure housing loan segment

Due to the relatively faster growth in HFCs vs Banks, the share of HFCs within the Housing Credit mix also picked up

India’s housing credit market grew significantly in recent years;Within housing credit, HFCs grew at a faster pace than Banks (Rs Tn)

Mortgage/GDP ratio much lower than the Asian peers

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 4.3

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Jun-16

FY 2002-2008

CAGR: 49%

FY 2014-2016

CAGR: 42%

(5) 5 72 71

352 282

469

40 21 (131) 1 (146) (93)

710 740

95

FY0

2

FY0

3

FY0

4

FY0

5

FY0

6

FY0

7

FY0

8

FY0

9

FY1

0

FY1

1

FY1

2

FY1

3

FY1

4

FY1

5

FY1

6

Q1

FY1

7

During FY2002-2008,the Equity MF net sales to AUM ratio grew from -3% to 27%

5

109 9 9

12

18

3

18

23

1617 17

20

26

32

FY10 FY11 FY12 FY13 FY14 FY15 FY16 Q1FY17

Deal Value (US$ Bn) Avg Deal Size (US$ Mn)

49%42%

31%

22%

FY02-08 CAGR FY14-16 CAGR

Equity MF Assets Total MF Assets

Equity MF spiked up in FY02-08 cycle; At cusp of another cycle now?

Source: AMFI

During such periods of upcycle, the CAGR in Equity AUM is significantly higher than that of Overall AUM

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, and can

increase further if India is at the cusp of another upcycle now (Rs Tn)

The last cycle from FY02-08 saw a significant rise in net sales which added to AUM; It is seeing traction since FY14(Rs Bn)

PE deal values slowed down this quarter, although average deal value spiked up with the $1.1 billion Mphasis-Blackstone deal

34Source: AMFI Source:: Venture Intelligence

40 65 61 67 58 6093 149 141 140 144 142325513 502 507 527 539

1,565

2,6142,304 2,414

2,540

2,444

FY14 FY15 FY16 Q1FY16 Q4FY16 Q1FY17

Options Futures Intraday Delivery

3,128

2,022

3,3403,007

3,270 3,184

Cash delivery dips YoY, although retail cash volumes pick up

Source: NSE, BSESource: NSE, BSE

35

Proportion of retail volumes within the cash volume mix in the market has picked up this quarter, on both QoQ & YoY basis

Market ADTO declined QoQ owing to a dip in options; While market ADTO was up YoY, cash delivery volumes dipped (Rs Bn)

Proportion of NSE cash volumes consolidated to

the largest brokers during bull-phases in the

markets, not bear-periods

Source: NSE

47% 50% 49% 47% 49% 52%

22% 21% 20% 19%21% 18%

22% 21% 22% 25% 21% 21%

9% 8% 9% 9% 9% 8%


DII FII Prop Retail

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%

FY20

01

FY20

02

FY20

03

FY20

04

FY20

05

FY20

06

FY20

07

FY20

08

FY20

09

FY20

10

FY20

11

FY20

12

FY20

13

FY20

14

FY20

15

FY20

16

Outside Top 100

Next 75

Top 25

Top

10

0 M

em

be

rs

-542 -220

804

-60134 76


FIIs clock healthy inflows while DII inflows slow down

Source: NSE

DIIs saw a slowdown in their net inflows, after 4 quarters of healthy inflows (Rs Bn)

36

As IPO activity picked up, the incremental demat accounts grew at a healthy pace as compared to recent years

Source: NSE, BSE

FIIs register healthy net inflows after 4 quarters of either outflows or marginal inflows (Rs Bn)

YoY growth in individual wealth held in financial & physical assets (Rs Tn)

FY2014 FY2015

Financial Assets

19.17%

160.55

134.72

FY2014 FY2015

Physical Assets

-2.35%

122.78

119.89

797

1,113

-142 26 45 147


20.0 21.0 21.8 23.3 25.4

1.00.9 1.5

2.00.6

FY13 FY14 FY15 FY16 Q1FY17

Existing Accounts (Mn) New Accounts (Mn)

Source: CDSL, NSDL Source:: Karvy Report 2014

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.

Thank You

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: [email protected]

Sourajit Aiyer

AVP - Investor Relations & Corporate Planning

Motilal Oswal Financial Services Limited

Tel: 91-22-3982-5500 / 91-22-39825510

Fax: 91-22-2282-3499

Email: [email protected] /

[email protected]

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