- Consolidated Profit After Tax: INR 1,242 crores, up by 123% year on year.
- Return on Equity (ROE): 48%.
- Consolidated Operating Net Revenue: INR 1,366 crores, up by 46% year on year.
- Consolidated Operating Profit After Tax (excluding treasury income): INR 541 crores, up by 53% year on year.
- Assets Under Advice: INR 5.7 lakh crores, up by 82% year on year.
- Net Worth: INR 11,070 crores, up by 48% year on year.
- Wealth Management Net Revenue: INR 634 crores, up by 53% year on year.
- Wealth Management Profit After Tax: INR 225 crores, up by 71% year on year.
- Retail Broking ADTO: INR 4,461 crores, up by 90% year on year.
- Cash Market Share: 7.9%, up by 85 basis points year on year.
- F&O Premium Market Share: 9%, up by 150 basis points year on year.
- Total Assets Under Advised: INR 2,94,000 crores, up by 88% year on year.
- Distribution AUM: INR 29,400 crores, up by 43% year on year.
- Distribution Net Flows: INR 2,400 crores.
- Distribution Net Revenue: INR 98 crores, up by 136% year on year.
- Asset Management AUM: INR 1,10,769 crores, up by 101% year on year.
- Asset Management Net Revenue: INR 201 crores, up by 64% year on year.
- Asset Management Profit After Tax: INR 104 crores, up by 68% year on year.
- Mutual Fund AUM: INR 80,000 crores, up by 124% year on year.
- SIP Flows: INR 1,878 crores for the quarter.
- SIP AUM: INR 17,641 crores.
- Alternate AUM: INR 30,646 crores, up by 60% year on year.
- Private Equity Fee Earning AUM: INR 9,956 crores.
- Private Wealth AUM: INR 1,57,000 crores, up by 68% year on year.
- Private Wealth Net Revenue: INR 242 crores, up by 51% year on year.
- Private Wealth Profit After Tax: INR 90 crores, up by 66% year on year.
- Capital Market Revenue: INR 174 crores, up by 52% year on year.
- Capital Market Profit: INR 73 crores, up by 45% year on year.
- Housing Finance AUM: INR 4,233 crores, up by 13% year on year.
- Housing Finance Disbursement: INR 368 crores for the second quarter, up by 86% year on year.
- Yield on Advances: 13.6%.
- Cost of Funds: 8.4%.
- Spread: 5.2%.
- Housing Finance NII: INR 81 crores.
- Housing Finance Profit After Tax: INR 27 crores.
- Gross NPA: 1.3%.
- Net NPA: 70 basis points.
- Gearing: 1.9 times.
- Capital Adequacy: 45.6%.
- ROE: 2.3%.
- ROA: 8%.
- Treasury Investments: INR 8,113 crores, up by 57%.
- XIRR on Treasury Investments: 20.8%.
Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Motilal Oswal Financial Services Ltd (BOM:532892, Financial) reported a consolidated profit after tax of INR 1,242 crores, marking a 123% year-on-year increase.
- The company achieved a return on equity (ROE) of 48% for the second quarter.
- Assets under advice grew significantly, crossing the 5.7 lakh crore mark, up by 82% year-on-year.
- The company's ratings outlook was upgraded from AA stable to AA positive by both Brazil and India ratings.
- The asset management business saw its AUM cross 1,10,769 crores, up by 101% year-on-year, with strong performances across mutual funds, PMS, and AI businesses.
Negative Points
- The housing finance business showed a modest AUM growth of 13% year-on-year, indicating slower growth compared to other segments.
- The cost to income ratio in the housing finance segment increased due to a rise in the sales relationship manager base.
- The company anticipates potential moderation in F&O volumes due to upcoming regulatory changes, which could impact revenue.
- Despite strong growth in other areas, the housing finance segment's yield on advances slightly reduced over the quarter.
- The treasury profits are largely unrealized and subject to market fluctuations, making them less predictable and not distributable as dividends.
Q & A Highlights
Q: Can you provide a breakdown of ARR and TBR contributions at the group level, and explain the high AUM in wealth management and private wealth management segments?
A: The ARR mix is largely driven by our asset management business, with a focus on improving ARRs due to increased flow rates. In wealth management, ARR improvement is seen in distribution business, while the direct broking and sub-broking revenue split is about 50-50. The high AUM in wealth management is due to strong client acquisition and market share growth. In home finance, the loan book is entirely secured, with a mix of housing loans, loan against property, and construction finance. The yield reduction is due to a higher proportion of retail housing loans, which have lower yields.
Q: What has contributed to the significant increase in SIP and gross sales market share in the AMC business?
A: Over 95% of our AUM is performing in the top tier across mutual funds and alternate assets. We have a wide range of passive funds and strong performance in our quant fund. Distribution is strong across banks, IFAs, and digital channels, with digital showing the highest YOY growth. We've launched new funds in various categories, enhancing our product suite, and are expanding our distribution footprint.
Q: How do you see the volumes and business outlook for the wealth management segment in H2?
A: Volume growth has been strong, especially in cash segments, which constitute 60% of our broking revenue. We expect cash volumes to continue growing, though there might be some moderation in F&O volumes due to regulatory changes. We are investing in distribution, aiming to double manpower over the next two years, which should enhance flows and assets.
Q: Can you clarify the composition of the private wealth management assets and the productivity of newly added RMs?
A: The private wealth AUM includes custody assets, which are 52,497 crores of the total 1,57,000 crores. Custody assets yield revenue when clients transact. ARR assets contribute 50% of revenues. We've added 100 RMs in the last year, aiming for 700 by year-end. Productivity improves over time, with RMs reaching 1-1.5x productivity in the first year and 3x by the third year.
Q: How should we view the treasury income and its impact on dividends?
A: Treasury profits are largely mark-to-market and not distributable as dividends. Our dividend policy focuses on cash earnings, not notional profits. The treasury book supports our agency businesses, serving as collateral for market transactions. While treasury profits are lumpy, the long-term XIRR is around 18-20%, with growth driven by both returns and profit plowback.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
