MOTILAL OSWAL AR 2022-23 NOTES
Chairman’s Message:
At MOFSL, we reported highest ever operating revenue of ₹ 4,319 crore in FY2023, registering a growth of 8% YoY. Our operating PAT touched an all-time high of ₹ 879 crore. Our consolidated ROE stood at 18%.
Equity Markets: On the capital markets front, Indian equity markets ended on a flattish note. Number of new entrants into the stock market declined as industry witnessed 2.5 crore new demat account being opened in FY2023 as compared to 3.5 crore in previous financial year. While FIIs were on a selling spree for second consecutive year, DIIs offset the pressure and recorded highest ever inflows.
Equity Retail Business: On the back of our strengths- “Phygital Business model” and “Research and Advisory”, our broking business recorded highest ever broking revenues, profits and Average Daily Turnover (ADTO) in FY2023. We added 6.5 lakh clients in FY2023, taking the total retail client base to ~35 lakh. We had one of the highest Average Revenue per User (ARPUs) in the industry. Our derivative market share was at multi period high in FY2023. Our distribution AUM stood at ₹ 21,300 crore and has huge head-room for growth. During the year, we launched Options Store and Research 360-degree App, further strengthening our offerings.
Institution Business: Rankings and Clientele remain robust. Completed largest private equity deal for Investment Banking Business.
AMC Business: Our AMC AUM which includes MF, PMS and AIF stood at ₹ 45,620 crore. During the year, we on boarded Prateek Agrawal, an industry veteran, to lead business and investment strategy. We strengthened our Risk Management framework and revamped investment process to deliver consistent returns. There was improvement in gross sales and a decline in redemptions. Fee earning PE and RE AUM stood at ₹ 10,280 crore. Our wealth management business AUM recorded a growth of 51% YoY at ₹ 52,000 crore. Our net sales was at an all-time high of ₹ 5,800 crore in FY2023.
Housing Finance Business: FY2023 was a landmark year where we reported highest ever PAT of ₹ 136 crore, with a 44% YoY growth. Disbursements crossed ₹ 1,000 crore milestone, registering a growth of 57% YoY. During the year, ICRA upgraded rating to AA/Stable from AA-/Stable. Our cost of borrowings for FY2023 stood at 8.0%, down by 24 bps YoY. Further, we have expanded our sales force with 690+ sales employees’ currently in place and we are present in 109 locations across 12 states/UTs. Our collection efficiency remained robust at 100.1% in FY2023. We have strengthened legal unit to pursue legal actions aggressively such as SARFAESI, section 138 and arbitration cases. As of March 2023, our GNPA stood at 1.1% and NNPA at 0.5%.
Fund Business: In our fund based businesses, our total investments including alternate investments stood at ₹ 4,280 crore with a since inception IRR of 16%. Our QGLP philosophy, niche expertise in equities, proven track record and belief in ‘skin in the game’, augurs well for our fund based business.
Business Development: Keeping in mind our growth aspirations, we on boarded 63 RMs during the financial year, taking the total count to 182. We will continue to invest in this business by adding RMs. With improvement in the vintage of RMs, the profitability of our wealth management is poised for further traction.
Opportunities:
Positive long-term economic outlook will lead to opportunity for financial services.
Growing Financial Services industry’s share of wallet for disposable income.
Regulatory reforms would aid greater participation by all class of investors.
Leveraging technology to enable best practices and processes.
Corporates looking at consolidation / acquisitions / restructuring opens out opportunities for the corporate advisory business.
Strengths:
Strong Brand Name
Experienced Top Management
Integrated Financial Services Provider
Independent & Insightful Research
Largest Distribution Networks of 550+ locations
Established Leadership in Franchisee Business
Strong Risk Management
State of the art infrastructure
Financial Prudence
Future Outlook: Strategy is to further diversify our business model towards more annuity sources of earnings. Adding more RMs will increase scale in wealth management business. Housing Finance business has witnessed turnaround by improving disbursement and profitability parameters. Our brand is now being recognized across each of our businesses. Each of our business segments offer huge headroom for growth and we are well placed to benefit from this.
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