Motilal Oswal Financial Services reports for FY22, Q4FY22

Motilal Oswal Financial Services Ltd.

Mumbai, April 30, 2022: Motilal Oswal Financial Services Ltd. announced its results for the quarter and year ended March 31, 2022 post approval by the Board of Directors at a meeting held in Mumbai on April 28, 2022.

Performance for the quarter and year ended March 31, 2022:

  • In Q4FY22, consolidated revenues grew by 21% YoY at Rs 1,100 cr, Consolidated PAT stood at Rs 300 cr including gains on investments. Operating profit (excluding gains on investments & PE share of profit on investment) for the quarter was highest ever at Rs 262 cr, +41% YoY.
  • In FY22, Consolidated revenues grew by 33% YoY at Rs 4,051 cr, consolidated PAT stood at Rs 1,310 cr. Operating profit for the FY22 was highest ever at Rs 905 cr, +69% YoY.
  • All business continues to demonstrate stellar performance– Capital market business PAT 68% YoY; Asset & Wealth +31% YoY led by +14% YoY AMC, +116% YoY Wealth Management and +46% YoY Private Equity business. Housing finance business reported highest ever profit.

Key highlights for the FY22

  • Most of Motilal Oswal’s businesses have delivered strong and sustainable performance in Q4FY22 and FY22.
  • Our Asset under Advisory (AUA) has crossed Rs 3 lakh crore mark led by all-time high AUM across AMC, Wealth and Distribution businesses.
  • Our Net worth has touched all time high at Rs 5,674 cr.
  • Capital Markets – Highest ever broking revenue and profit in FY22, business has delivered consistent growth in profits over last several quarters, growth in active clients & client addition led by traction in digital acquisition channel, 99% YoY growth in ADTO, cash market share at multi-year high, robust net sales in distribution business, Investment banking mandate pipeline started fructifying.
  • Asset Management– Highest ever AUM, strong gross & net flows, strong response to our AIF offerings, increase in SIP book and continued traction in our passive offerings. Our largest ever PE growth fund (IBEF-IV) has achieved its 2nd close at Rs 4,000 cr within 7 months of launch. It has a target size of Rs 4,500 cr. Similarly, launch of our 5th real estate fund (IREF- V) has raised Rs 1,200 cr.
  • Home Finance – Strong pick-up in disbursements, traction in login/sanction pipeline, expansion in sales force, diversification of liability franchisee and sharp reduction in cost of funds.  Rating upgrade to AA/Stable by CRISIL & India Ratings.
  • Consolidated net worth is at all-time high at Rs 5,674 cr, net debt is Rs 4,140 cr. Excluding Home finance, net debt is Rs 1,800 cr. Total D/E stood at 1.1x. Ex-MOHF D/E stood at 0.6x. Net of investments, we have a net cash balance sheet. RoE for FY22 stands at 30%.
  • The board has declared final dividend of Rs 3 per share (FV Re 1/share) resulting in total dividend of Rs 10 per share. Board has also decided to consider Buyback program in its separate board meeting to be held on 17th May.
  • Besides financial performance, recent time has been very eventful in terms of our successes in brand building, advertising and several other fronts. MOFSL ranked 1st in “Best Local Brokerage” category in Asia Money broker’s poll 2021. MOFSL once again recognized as a “Great Place to Work” – India certified organization, Motilal Oswal won “Best PMS in 10 years performance” across all categories at India’s Smart Money Manager Awards – 2021. Motilal Oswal Private Wealth Management won “Best Digital Private Bank-India” at Asiamoney Private Banking Awards 2022.Motilal OswalPrivate Equity has been awarded as “Growth Capital Investor of the Decade” at the Venture Intelligence APEX PE-VC Awards. 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.
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Speaking on the performance of the company, Mr. Motilal Oswal, MD & CEO said “All of our businesses have delivered strong & sustainable performance in Q4FY22 & FY22. This was 2nd consecutive year of highest ever performance in terms of Revenue, Profit and AUM. Our retail broking business which is our cash cow business has achieved new highs on various parameters and benefitting from market expansion and industry consolidation. Our Institutional Broking business has been ranked #1 local brokerage house consecutively for 2nd year in Asiamoney poll 2021. Our strategy to invest business profits in our own equity investment products yielded strong returns and as a result our Net worth has touched new high. Moreover, our strategy to diversify our business model towards linear sources of earnings continue to deliver results. Our Asset Management business is likely to gain from process driven investing and its niche offerings. Our Wealth Management business has delivered stellar performance this year and on its way to achieve scale in this business. Our PE business has delivered on both successful exit of its investment and fund raise of its largest ever fund. Our Housing finance business has witnessed turnaround by registering highest ever profitability and now geared up for sustainable growth. Each of our 7 businesses offers headroom for growth. “

Performance of Business Segments of Motilal Oswal Financial Services for the quarter and year ended March 31, 2022

·      Capital markets Businesses (Broking & Investment banking)

  • Capital markets comprise of Retail Broking, Institutional Equities and Investment Banking business. Revenues for this segment were Rs 693 cr, +35% YoY in Q4FY22 and Rs 2,537 cr, +48% YoY in FY22. Capital market businesses have contributed ~55% of consolidated revenues.
  • Profit grew by 79% YoY at Rs 144 cr in Q4FY22 and 68% YoY to Rs 490 cr in FY22 led by healthy volume growth of 106% YoY / 29% QoQ and improvement in cash market share.
  • In Retail Broking & Distribution, we have witnessed strong traction in new client addition driven by Online and other channels, total 8.8 lakh clients acquired in FY22, +43% YoY. NSE active clients have also registered 59% YoY growth at 9 lakhs as of Mar 2022.
  • Our strategy to bring in linearity through the trail-based distribution business is showing results. Distribution AUM grew by 31% YoY at Rs 16,764 cr as of Q4FY22. With only 16% of the ~28.5 lakh 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. We have registered strong insurance premium collections in FY22 at Rs 57 cr, up 43% YoY.
  • In Institutional Broking, team wins big in Asiamoney poll 2021. Ranked #1 Best local brokerage House, Best sales and Best Execution and Corporate access. Strong improvement in domestic client rankings 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.
  • Investment Banking business has participated in 13 deals. The business has made a strong turnaround in performance in FY22. Further, there is a strong pipeline of signed IPO mandates which has started entering the markets from Q4FY22 onwards, as a result further revenue traction can be witnessed in coming quarters.
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·      Asset Management businesses (AMC, PE and PWM)

  • Asset Management business AUM across MF, PMS & AIF stood at Rs 49,020 cr, +13% YoY. Strong growth of 21% YoY in PAT at Rs 183 cr in FY22 (excluding one-time tax reversal impact in FY21).
  • Equity MF AUM stood at Rs 30,600 cr, +18% YoY. We have seen improvement in performance of several products, also launch of new alternate & passive products resulting in stronger gross sales and Net sales.
  • We have added around 4.8 lakh SIPs in FY22, +54% YoY. New SIP count market share stood at 1.8% in FY22.
  • Our share of Alternate assets, comprising of PMS & AIF, is the highest among AMC’s at ~37%.
  • Private Equity has fee earning AUM of Rs 10,000 cr across 3 growth capital PE funds and 4 real estate funds. In Q4FY22, revenues grew by 92% YoY at Rs 47 cr and PAT grew by 184% YoY at Rs 20 cr. In FY22, revenue grew by 31% YoY at Rs 131 cr and PAT grew by 46% at Rs 43 cr. The 1st growth fund (IBEF 1) has delivered an XIRR of 26%+. Average IRR on exited investments in Real estate funds is 21%+. IREF V has raised Rs 1,200 cr. PE biggest fund launched with IBEF IV with a target size of Rs 4,500 cr, achieved its 2nd close at Rs 4,000 cr.
  • Wealth Management business AUM grew by 36% YoY at Rs 34,389 cr in Q4FY22. Wealth business revenue grew by 28% YoY / 53% YoY to Rs 48 cr / Rs 194 cr in Q4FY22 & FY22 respectively. Wealth business has delivered highest ever profits for FY22 at Rs 59 cr, +116% YoY. This growth was led by strong net sales at Rs 5,400 cr in FY22. Yield stood at ~63 bps. RM count of this business stood at 144. Our trail revenues predominantly cover our fixed costs.  Strong operating leverage is visible led by improvement in RM productivity. We continue to invest in this business by adding RMs.
  • Overall Asset and Wealth Management revenues were Rs 264 cr, +8% YoY in Q4FY22 and Rs 947 cr, +25% YoY in FY22. Asset & Wealth contributes 23% of consolidated revenues. Profits were Rs 83 cr, in Q4FY22 and Rs 285 cr, +31% YoY in FY22 and contributed 28% of consolidated profits.
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·      Housing finance business

o   Motilal Oswal Home Finance (MOHFL) reported highest ever profit of Rs 46 cr in Q4FY22, +148% YoY and Rs 93 cr in FY22, +133% YoY.

o   NII grew by 11% YoY and NIM expanded to 7.3% in FY22.

o   Yield on Advances stood at 13.9% in FY22 while Cost of Funds was down by 105 bps YoY to 8.2%, resulting in expansion in Spread by 66 bps YoY to 5.7%. 

o   We have raised Rs 1,400 cr in FY22 at an average cost of 7%.

o   Disbursements grew by 2.4x in FY22 to Rs 643 cr. Business is geared up for stronger growth in disbursements.

  • GNPA was down by 60 bps YoY to 1.6% in FY22 led by improved collection efficiency, which stood at 104% in March 2022.
  • Rating upgrade by CRISIL & India Ratings to AA/Stable. These ratings upgrade will further benefit us in lowering incremental CoF.

o   Net Gearing stands at 2.3x and Tier 1 CAR remains robust at 50%.

·      Fund based investments includes sponsor commitments to our AMC & PE funds and strategic equity investments.

o   Fund based investments have registered gains in a quarter of Rs 40 cr in Q4FY22 and Rs 407 cr in FY22.

o   Total quoted equity investment including unrealised gains was Rs 2,680 cr as of FY22. Cumulative XIRR of these investments is ~17% (since inception).

  • Total equity investment including alternate funds was at Rs 4,050 cr as of Mar-22. XIRR of 26% on PE/RE investments.