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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


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 [email protected]

+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


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


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)


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


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)


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)


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)


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


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)


Revenues 1,485 339 338.1 (3,754) NM

PAT 1,303 350 272.3 (3,520) NM


MOHFL


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)


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


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


MF/PMS/AIF AUMs declined 1.5/18.0/21.5% YoY


SIP market share


IB revenues remained soft


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


Broking: Yield remains strong


Broking ADTV's market share

Note: Ex-prop ADTV numbers are used to calculated market share.

Source: Company, HSIE research

MOHL: Disbursements remain muted


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


MOHFL: NNPL declined to 1.3%


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


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


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


Page | 9


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


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


Page | 10


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


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


Page | 11


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


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


Page | 12


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

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0

Jun

-20

Jul-

20

Au

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0

MOFS TP

Page | 13


Disclosure:

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