Report Write 2

Motilal Oswal Financial Services Limited

Motilal Oswal Financial Services Limited BSE: 532892

NSE: MOTILALOFS

www.motilaloswal.com

Bloomberg:MOFS:IN Bloomberg:MOFS: IN

Reuters: MOFS.BO

Corporate Overview

Businesses

Strategy

Performance

Industry facts

Corporate Overview

Businesses

Strategy

Performance

Industry facts

Corporate Overview

●

Group Profile & Structure Structure

●

  Evolution

●

 Our Businesses

●

 Our Strengths

●

 Corporate Governance

●

 Management Team

Businesses

Strategy

Performance

Industry facts

Group Profile and Structure ●

Well-diversified, financial services company offering a range of financial products and services

●

Focused on wealth creation for all its customers, such as institutional clients, HNWIs and retail customers

●

Network spread over 527 cities comprising 1,484 business locations operated by our business partners and us with 773,716 total registered customers

●

Shares listed on the Bombay Stock Exchange and National Stock Exchange in Mumbai

Motilal Oswal Financial Services Ltd.

99.95%

100%

85%

99.95% #

99.95% #

Motilal Oswal

Motilal Oswal Investment

Motilal Oswal Private

Motilal Oswal Asset

Motilal Oswal

Securities Ltd.

Advisors Private Ltd.

Equity Advisors Private Ltd.

Management Co. Ltd.

Wealth Management Pvt. Ltd.

Institutional Equities

Investment Banking

Private Equity

Mutual Funds

Real Estate

Offshore Funds

Portfolio Mgmt Services

Broking & Distribution

# through Motilal Oswal Securities Limited 

Data as on Mar 2013

Financial Strategy Wealth Management

Evolution Broking

Integrated Financial Services

Mutual Fund Principal Strategies

Principal Strategies

Wealth Management

Wealth Management

Wealth Management

Lending (LAS)

Lending (LAS)

Lending (LAS)

Private Equity

Private Equity

Private Equity

Investment Banking

Investment Banking

Investment Banking

PMS

PMS

PMS

PMS

Distribution MF, IPO

Distribution MF, IPO Insurance

Distribution MF, IPO Insurance

Distribution MF, IPO Insurance

Institutional Equities

Institutional Equities

Institutional Equities

Institutional Equities

Institutional Equities

Retail broking

Retail broking

Retail broking

Retail broking

Retail broking

2008

2010

1987 - 95

1996 - 2005

2006 - 2007

Our Businesses

Broking &

Private

Distribution

Equity

Independent and INSIGHTFUL

STRONG RELATIONSHIPS with

RESEARCH

institutional investors Institutional Equities

Asset

and high net worth investors

Management

(HNIs)

HIGH CREDIBILITY resulting in

Well established DISTRIBUTION NETWORK

Investment Banking

Wealth

higher cross-selling

Management

opportunities

Principal Strategies

INTEGRATED FINANCIAL SERVICES PROVIDER

Our Strengths Strong Brand Name Strong Investment Culture

Experienced Top Management

Strong Risk Management Practices

Independent and Insightful Research

Leadership in Franchisee Business

Financial Prudence Large Pan-India Distribution Network

Corporate Governance ●

●

MOFSL is committed to ensuring compliance with the best practices in corporate governance

Balkumar Agarwal

Composition of MOFSL’s Board of Directors:

Mr Agarwal a retired IAS officer (1967 batch). He has served as Additional Chief Secretary, Secretary (Housing), Secretary (Transport), Secretary (Industries) to the Government of  Maharashtra, and as the MD at Maharashtra State Warehousing Corp, Maharashtra State Financial Corp etc

o

The Board currently consists of 6 members with 50% composition of Independent Directors

●

●

Independent Directors

MOFSL has six major Board level Committees : o

Audit Committee

o

Shareholders / Investors Grievance Committee

o

Remuneration / Compensation Committee

o

Nomination Committee

o

Risk Management Committee

o

Asset Liability Management Committee

o

ESOP Committee

o

Debenture Committee

External auditors play a role in providing an independent assessment of  MOFSL’s financial position

Praveen Tripathi Mr Tripathi is the CEO of Magic9 Media & Consumer Knowledge Pvt Ltd. He is the Chairman of the National Consumer Classification System Committee and has also worked with Pidilite, Hansa Consulting, Zenithmedia, Starcom/Leo Burnett etc

Vivek Paranjpe Mr Paranjpe is a consultant in HR & strategic management with companies like Reliance Industries, Blackstone etc. He was the Director, HR Operations at HP Singapore, and has worked with Hotel Corp, Johnson & Johnson, Hindustan Lever etc

Management Team Chairman & Managing Director

Joint Managing Director & Co-founder

Motilal Oswal

Institutional Equities

Raamdeo Agrawal

Navin Agarwal

Director Navin Agarwal

Research

Rajat Rajgarhia

Chief Operating Officer

Ajay Menon

Investment Banking

Ashutosh Maheshvari

Private Equity

Vishal Tulsyan

Corporate Affairs

Broking & Distribution

Vijay Goel

Chief Financial Officer

Sameer Kamath

Wealth Management

A.V. Srikanth

Information Technology

Ashwini Yadav

Business Process Excellence

Praveen Arora

Srikanth Iyengar

Marketing

Ramnik Chhabra

Kishore Narne

Human Resources & OD

Sudhir Dhar

Asset Management

Principal Strategies

Commodity & Currency

Aashish Somaiyaa

Harsh Joshi

Building Infrastructure for the Future  – Motilal Oswal Tower ●

  MOFSL has invested in a new Corporate Office building in Prabhadevi, Mumbai with the aim to consolidate all businesses within a single location and leverage on group synergies.

●

Total built-up area is 260,000 sq feet across 12 floors at a cost of  approximately

`2.80Bn

(funded through internal accruals and

capitalised in balance sheet). ●

Approximately 33% of the area would be let out in the initial years of operations

●

Thus, MOFSL will be able to utilise significantly larger floor space at an incremental cost.

Established in 1987, MOFSL completed 25 years of its journey in 2012. It celebrated its 25 th Annual Day at its own Motilal Oswal Tower

Corporate Overview

Businesses

●

Broking & Distribution

●

Institutional Equities

●

 Wealth Management

●

  Investment Banking

●

 Asset Management

●

 Private Equity

Strategy

Performance

Industry facts

Retail Broking and Distribution MOFSL offers investment services to retail clients, including equity & commodity broking, currency trading and distribution of financial products Growing Customer Base ●

●

Pan-India Distribution Reach

Total registered client base of 773,716 including 679,848 retail broking and distribution clients

●

The ‘Customer first’   philosophy is executed through strategic focus on: o

o o

Increasing distribution reach and customer segmentation on individual client’s  needs

●

‘Knowledge First’ for Client Engagement

  Developed a Pan-India network in 527 cities across 1,484 locations (branches + franchisees), while ensuring the quality of  the locations at the same time

●

Use of simplified research products which have been customized for retail clients to help them understand the investment ideas and enable them to take informed decisions

  Extensive distribution network provides opportunities to cross-sell products

Wide bouquet of offerings   Customer connect through investor seminars for our clients and business partners Total Registered Clients 709,041

746,932

773,716

FY12

FY13

●

621,215 541,372

FY09

FY10

FY11

Distribution (Locations & Cities) Business Location

Retail Broking & Distribution Clients 548

471,062

550,401

628,012

657,119

568

679,848

1,289

1,397

No of cities

611 1,644

552

527

1,579

1,484

In line with the philosophy of Knowledge First, MOSL conducts education seminars for investors and business partners each year on a Pan India basis. Last year, it conducted a multi-city investor education series ‘Investor Ki Kahani Usi Ki Zubaani ’,   which saw a healthy turnout of investors in all the cities

Retail Broking and Distribution ‘Partnering For Growth’ Franchisee Model ●

●

●

Apart from branches, MOFSL also operates a franchisee-based business partner model

Leveraging on Technology ●

Some of our Business Partners have grown manifold in terms of scale of business

Delivery models:   Our newly developed trading platform  –  LITE, is powerful, featurerich, and available in multiple versions Lite-Web

●

Online Account Opening industry first feature

is

MOSL’s

LITE-Mobile

  Operates ‘Upper MOST’,  an interactive online tool for business development, reward, recognition for business partners

●

LITE-Desktop

Portfolio Tracking and Review: Review and restructuring of client portfolios, recommends model portfolios, etc My Motilal Oswal

Portfolio Restructuring

●

Advisory Platforms:  Direct dissemination of  MOSL research and recommendations, with interactive features and customized view Idea Dashboard 3.0

Strong Advisory Infrastructure Advisory Dashboard

●

Recent equity strategies like MOSt Velocity etc saw good response from investors

Institutional Equities: Research is our Strength ●

Our Research has won Awards consistently, recent being:-

Provides equity cash and derivatives brokerage services for institutional clients

●

Ranked No. 2 in Best Local Brokerage, Best Overall Sales

●

Client base of 527 institutions, as of Mar 2013

Service, Best for Events and/or Conferences & No. 3 in Best

●

Strong research team comprising of 27 research analysts covering

for Most Independent Research Brokerage in the AsiaMoney

almost 200 companies across over 20 sectors and 27

Brokers Poll 2012

commodities ●

●

●

●

Its Annual Global Investor Conference is one of the largest event

Won 4 awards at the ET-Now Starmine Analyst Awards 2010 placing it amongst the Top 3 award winning brokers

Research is supported by extremely strong Sales Trading and Corporate Access teams

Won awards at the Zee Business India’s  Best Market Analyst Awards 2011 and 2012

  Research product portfolio encompasses economic, sector, company and thematic reports

●

●

●

Ranked 2 (Best Local Brokerage) by the AsiaMoney Brokers Poll 2010 and 2009

●

Rated No.1 (Best Recommendations Mid & Small Caps) and

formats of its kind in this industry

won awards in 3 out of 4 categories at the Starmine India

It conducted its 8th edition in Mumbai in August 2012, with over

Broker Rankings 2009 from Thomson Reuters

100 leading companies & experts interacting with over 180

●

Ranked 2 (Best Indian Broker 2009) by Institutional Investor

institutional funds from across the world

●

No.1 Broker in ET Now-Starmine Analyst Awards 2009

ET Now Starmine Analyst Awards 2010-2011  Award Winning Categories: Category

Sector

Rank

Top Earnings Estimator

Across Sectors

1

Top Earnings Estimator

Financials

1

Top Stock Picker

Energy

1

Top Stock Picker

Real Estate

2

Sample Research and Corporate Access Recent Research – Providing vivid and deep insights into Indian Equities

8th Annual Motilal Oswal Global Investor Conference

Annual Wealth Creation Study MOFSL conducted its 17 th Annual Wealth Creation Study in December, 2012. The presentation of the study was followed by a Panel Discussion o n the ‘Role of Competitive Strategy in Wealth Creation’. The discussion was covered live on CNBC TV18

●

●

●

The study identified ITC, TTK Prestige and Kotak Mahindra Bank as the biggest, fastest, consistent wealth creators, respectively It showed the contribution of the top-10 wealth creators declined from 76% in 2003 to 41% in 2012, indicating a more widespread wealth creation Financials have emerged as the largest wealth creating sector, followed by the Consumer sector

Theme of this study was on ‘Economic Moat – Fountainhead of Wealth Creation’ ●

●

The 17th Wealth Creation report can be downloaded by clicking on this link http://www.motilaloswal.com/Wealth_Cre ation_Study/Studies/ 

Economic Moat refers to how companies are able to build a sustainable competitive advantage, to keep competitors at bay for an extended period Extended competitive advantage period of Economic Moat companies leads to sustained superior profitability, by protecting it from being attacked by multiple business forces. This may ensure stock returns and eventually, wealth creation

●

Strength of a Economic Moat is determined by the industry structure and the corporate strategy

●

Over 2002-2012, Economic Moat companies have meaningfully outperformed the benchmarks

Mr Motilal Oswal  –   CMD, MOFSL and Mr Raamdeo Agrawal  –  Jt MD, MOFSL with Panel Members: Mr Amit Chandra  – MD, Bain Capital, Mr Anil Singhvi  –   Chairman, Ican Investors and Mr Sanjoy Bhattacharyya  Founder, Fortuna Capital

Private Wealth Management ●

During Q4FY13, our private wealth management business launched the new and improved advisory proposition with the motto ‘Responsible Advisory’ under the brand ‘Motilal Oswal Private Wealth Management (MOPWM)’

●

The value proposition is based on what clients are really seeking  – Comprehensive risk profiling leading to portfolio advice which can be objectively tracked for value addition basis which it can be rewarded

●

MOPWM launched India’s first Advisory Index which will help clients track the value addition by an advisor objectively - an Industry First

●

These initiatives aim to set a precedent in the way this business is run today

●

Private wealth management business had an AUM of  ` 20.2 billion, as of Mar 2013

●

The business has been strengthened with the joining of A.V. Srikanth as CEO. Prior to this, he was with an Indian wealth management firm, where he played a significant role in growing the vertical. He was an integral part of the team that won several accolades for its product and advisory delivery Our Offerings: A comprehensive menu of Multi Asset Class Advisory Solutions Professional Money Managers •

 Mutual Funds

•

• •

Alternative Assets

  Equity

•

 Private Equity

•

PMS

•

Fixed Income

•

 Real Estate

•

Alternative Invst. Funds

•

Commodity & Currency

•

 Structured Products

Credit Solutions •

Trading

IPO Financing, ESOP Funding   LAS/LAP Institutional Credit Solutions

Wealth Transmission • • •

  Estate Planning Trust services   Wills

Specialized Services •

 Investment Bnkg. Services

•

Offshore Advisory & Solutions

•

 Hedging & Insurance Advisory

Ancillary Services • •

Tax Advisory   Legal Advisory

Investment Banking ●

 Deal making remained subdued across the industry, delaying transaction closures. In this environment, companies continue to be cautious and play the wait-and-watch game with respect to capital raising activities, impacting the flow of new projects

●

 Strong management team with substantial experience in investment banking, corporate banking and advisory

●

 Won the “Asia  Pacific Cross-Border Deal”  and the “India  M&A Investment Banker”  awards in 2010 for the M&A transaction of  India’s  Shree Renuka

Sugars and Brazil’s Equipav SA ●

 Given our strong expertise in cross border deals, Motilal Oswal Investment Banking was the Lead Sponsor for the Latin America India Investors Forum in Nov 2011. This Forum was designed to connect corporates with institutional investors for business relationships between India and Latin America.

●

However, the business is well aligned to arising market opportunities and the execution pipeline remains strong Latin America India Investors Forum 2011, Mumbai

Select Transactions

Asset Management Portfolio Management Services business (PMS) ●

MOSL transferred the PMS business to Motilal Oswal AMC via slump sale with effect from Oct 2010

●

As on Mar 2013, PMS AUM was `12.6 billion

●

As per SEBI data, our PMS had a market share of 8% in terms of

Mutual Funds business (MF) ●

Mutual funds AUM across the 5 funds was  ` 4.6 billion, as of Mar 2013 o

MOSt Shares M50 ETF (M50) is India’s 1st Fundamentally Weighted

ETF based on the S&P CNX Nifty Index o

MOSt Shares Midcap 100 ETF (M100) is India’s 1st Midcap ETF

based on the CNX Midcap Index

discretionary-listed equity PMS assets, as of Aug 2011 o

MOSt Shares Nasdaq 100 ETF (N100) is India’s 1st US equities based ETF, denominated in Indian Rupees

PMS AUM ( Mn)

o

MOSt 10 Year Gilt Fund (10 Yr Gilt) is India’s 1st fund providing

access to 10 Year benchmark Government Bond o

  MOSt Shares Gold ETF is India’s 1st Gold ETF which enables investment as well as consumption of pure gold for retail investors

o

MOSt Focused 25 Fund is investing in cos. with sustainable competitive advantages, quality, longevity & high growth potential Mutual Funds AUM ( Mn)

●

The AMC business has been strengthened with the appointment of Aashish Somaiyaa as CEO. He was earlier with a leading AMC as Head of Retail Business, where he played a significant role in growing the sales & distribution of its offerings through retail, banking and wealth channels across India & UAE

Motilal Oswal MOSt Shares Motilal Oswal MOSt Shares ETF Conclave ●

Conducted the 2nd MOSt Shares ETF Conclave in June 2012. The

Most Innovative Fund Awards Nasdaq 100 ETF won the ‘Most  Innovative ETF Asia Pacific 2011 ’

●

award at the 8th Annual Global ETF Awards 2012 in USA

objective was to demystify ETFs for Indian investors by discussing their advantages, building portfolios with ETFs and Vanguard’s success ●

The M50 ETF bagged the ‘Most   Innovative Fund of the Year’

●

award at the CNBC TV18-CRISIL Mutual Fund Awards 2011

James Norris, MD, Vanguard International gave the keynote speech

Launch of MOSt Shares Nasdaq 100 ETF Motilal Oswal 2nd Value Investing Forum ●

MOAMC hosted the 2nd edition of Value Investing Forum in Oct 2012. The topic was ‘Sources of Margin of Safety & its Importance in Value Investing’

●

MOAMC became the first Indian AMC to ring the opening bell at NASDAQ in USA during the launch of the Nasdaq 100 ETF

Private Equity ●

MOPE is an investment manager and advisor to private equity funds, acts as an advisor and mentor to the investee companies and leverages the relationships of the Motilal Oswal group for the benefit of these companies

●

India Business Excellence Fund (IBEF) is a growth capital fund with AUM of US$ 125 million fully committed in 13 companies. During a challenging year, it partially exited two companies via secondary sales at healthy multiples. It has returned approx 38% of capital to its investors so far

●

India Realty Excellence Fund (IREF) is a domestic real estate fund with AuA of `2 billion. IREF has made investments in 7 deals, committing about 92% of funds under management as of Mar 2013. Following partial exits from three projects, it has returned approx 19% of capital to investors so far

●

The 2nd growth capital PE fund, India Business Excellence Fund-II achieved its third closing this quarter, with commitments of `5.6 billion from both domestic and foreign investors. It is currently evaluating several investment opportunities and has made two investments so far Investment Process

Motilal Oswal Private Equity won ‘Best Growth Capital Investor-2012’ award at the

Awards for Private Equity Excellence 2013

Nurturing Process

Corporate Overview

Businesses

Strategy

●

Size of opportunity

●

 Our Strategic Focus

●

 Progress Against Strategy

Performance

Industry facts

Size of Opportunity India’s equity broking opportunity: Market size in terms of revenue pool expected to grow 6 times o ver the next 10 years 697

Methodology: ●

Current size of broking revenue pool estimated at  ` 112Bn

●

Market Cap to touch US$5Tn by 2020 based on GDP:Market Cap ratio of 1:1

●

Assume trading velocity to double from current 37% to ~80% by 2020

●

This gives a expected market size of ~`697Bn by 2020, comprising

454 6.2xGrowth

112 `243Bn

80

in institutional and  ` 454Bn in retail segment

243 32

FY 2010

Source: MOSL estimates

Factors that will help achieve this growth ●

●

●

Sustained economic, savings discretionary income growth

and

Increase in retail participation   Increased ability of DIIs to mobilize savings

●

Higher India allocation by global funds

●

Increase in fund raising by corporates

●

Higher issues of fairly priced IPO/FPOs

●

Tech-based tools for client’s convenience

FY 2020E

Institutional (Rs Bn)

What Motilal Oswal is doing to create scale

Although certain external risks remain

●

Increasing distribution reach across India

●

●

Using simplified research products

●

●

Client focused advisory services

●

Investor education for client engagement

●

Tap the allocation of India focused funds

●

Launched AMC to mobilize investments

●

●

●

Develop relationships with corporates embarking on the next phase of growth Technology for better client experience

Retail (Rs Bn)

●

High inflation and interest rates Regulatory changes required DIIs to realign their marketing strategy to be able to channelize higher savings   Global recovery reducing India’s relative attractiveness among global funds   Poor performance of IPOs post listing

Our Strategic Focus ●

Leverage research and advisory capabilities

●

Investor education and knowledge dissemination

●

Good quality Pan-India distribution network

●

Strengthening Wealth Mgt’s product

bouquet and customized advisory ●

●

Leveraging on technology

●

Develop innovative, market-access products for the AMC platform

Increase Retail /

Grow

Wealth Mgmt share

Fee based

●

Grow the Investment Banking business

●

Ensure quality deal flow for Private Equity

revenues

rd

Distribution of 3 party products KNOWLEDGE FIRST Solid Research

Increase ●

 Increase Research support

●

  Build strong institutional relationships

Solid Advice

Institutional

Fund based

market share

revenues

●

Use Principal Strategies Group to maximise returns using risk free arbitrage strategies

●

through wider and quality research ●

Grow

Grow the Capital Markets Lending book across client segments to complement our

  Grow institutional derivatives business

Risk-Free Balance Sheet and

strong cash equities business

Flexible Cost Structure

●

 Judicious use of Capital to ensure high Return on Equity and low Leverage ●

 Flexible Cost structure to maintain Profitability across market cycles

Progress Against Strategy Research Consistently won awards for earnings estimation and best recommendations, thus showcasing our strong research capabilities Retail Distribution Reach Grew the Pan-India distribution presence further, currently stands at 1,484 locations across 527 cities Corporate Access The Annual Motilal Oswal Investor Conference is reckoned as one of the best-in-class conferences in India for institutional investors

Wealth Management Product Bouquet Strengthened Wealth Management’s  product portfolio to offer multiple investment options and a holistic asset allocation for clients

Private Equity businesses Strong on-ground relationships helped achieve a healthy portfolio for existing funds and ensure good mobilization for the new fund

Investor Awareness on Equity Investing Continued its investor education initiatives and use of  simplified versions of institutional research for the retail investors, in line with the Knowledge First philosophy Empanelment of Institutions Added to the number of domestic and foreign institutions empanelled Technology Tools and Platforms Successfully developed and implemented a number of techbased initiatives, including in-house developments

Asset Management business Launched innovative mutual funds, most of which were India’s  Firsts in terms of the market access provided by the investment products strategies

Consistent Margins and Low-Risk Balance Sheet Flexible cost structure and negligible debt levels helped deliver consistent profit margins and strong RoE, despite market cycles

Corporate Overview

Businesses

Strategy

Performance

●

●

Financial Performance  Recent Awards

Industry facts

Annual Financial Performance at a Glance Consolidated revenues ( million)

6,453

EBIDTA ( million, margin %) 39%

43%

6,008 4,711

4,661

2,770

4,729

Reported PAT ( million, margin %)

38%

34%

37%

26%

20%

23%

1,704

FY09

FY10

FY11

FY12

FY13

FY09

Net worth ( million); ROE % (based on Avg NW and Reported PAT)

20% 10,595

11,409

12,179

1,585

FY10

FY11

23%

1,371

2,295 1,807

22%

FY12

1,744

926

FY13

FY09

Net Cash ( million)

FY10

FY11

1,039

1,091

FY12

FY13

Revenue Composition (%) 2% 5% 14%

3% 6% 10% 10%

10%

5,428

2% 7% 13% 7%

1% 11%

2% 13%

17% 2%

21%

69%

63%

2%

9,460 7,939

14%

12%

9%

3,250

9%

2,710

2,144

FY09 FY09

FY10

FY11

FY12

FY13

FY09

FY10

FY11

FY12

72%

71%

70%

2,772

FY13

FY10

FY11

Others Funds base d busine ss Broking & operating income

FY12

FY13

Asset management fees I nve stme nt bank ing fe es

Consistently increasing dividends

2.00 35% 1.50 1.40

26%

1.20 0.80

0.80

17%

13% 10% 7%

FY08

FY09

FY10 DPS

FY11

FY12

FY13 #

Payout*

# For FY13; `1 is paid as interim dividend + `1 is proposed dividend; Buyback has been proposed * Payout is calculated on Adjusted PAT for the respective years

Latest Quarter Performance Particulars million

Brokerage & operating income Investment banking fees Fund based income  Asset Management Fees Other income

Total Revenues EBIDTA PBT (before E & EOI) Reported PAT Adjusted PAT (before E & EOI) EPS - Basic (before EOI) EPS - Diluted (before EOI) No.of shares outstanding (million) - FV Rs 1/share

Operating costs% Personnel costs% Others% EBIDTA% PAT% Adjusted PAT%

Q4 FY13 Q3 FY13  Mar 31, Dec 31, 2013 2012 763 772 8 20 377 200 170 139 23 19 1341 1150 570 388 477 310 367 292 328 196 2.6 2.0 2.6 2.0

Change (%) Q-o-Q  -1% -59% 89% 22% 19% 17% 47%

54% 26% 67%

Q4 FY13 Q4 FY12 Mar 31, Mar 31, 2013 2012 763 904 8 39 377 225 170 130 23 (1) 1341 1297 570 409 477 345 367 217 328 218 2.6 1.5 2.6 1.5

Change (%) Y-o-Y -16% -79% 67% 31% nm 3% 39%

38% 69% 50%

FY13 FY12 Mar 31, Mar 31, 2013 2012 2980 3240 78 88 997 822 591 504 83 59 4729 4711 1744 1585 1437 1419 1091 1039 969 967 7.6 7.2 7.6 7.2

145

145

145

145

145

145

21% 22% 14% 42% 27% 24%

25% 23% 18% 34% 25% 17%

21% 22% 14% 42% 27% 24%

27% 25% 17% 32% 17% 17%

23% 23% 17% 37% 23% 20%

25% 24% 16% 34% 22% 21%

E & EOI = Exceptional items & Extraordinary items, EOI = Extraordinary items

Change (%) Y-o-Y -8% -11% 21% 17% 41% 0% 10% 1% 5% 0%

Recent Awards Existing Businesses: Retail Broking and Distribution, Institutional Equities

'Best Performing National Financial Advisor Equity Broker' award at CNBC TV18 Financial Advisor Awards 2012, for the 2nd year

‘Best Equity Broker’

award at Bloomberg UTV Financial Leadership Awards 2012

‘Retailer of the Year

(Banking & Financial Services)’ award at the

Retail Excellence Awards 2012

Adjudged amongst Top 20 innovators in BFSI space at the Banking Frontiers Finnovity Awards 2012

‘Best Equity Broking House’ award for

FY11 at the Dun & Bradstreet Equity Broking Awards 2011

Felicitated by BSE for being Amongst the Top Five Performers in BSE Star – Mutual Fund and Amongst the Top Ten Performers in Equity Segment for the period Nov 2010 – Sept 2011

New Businesses: NBFC, Asset Management, Private Equity and Investment Banking

‘Best Capital Markets and Related NBFC’ award at

the CNBC TV18 India Best Banks and Financial

Nasdaq 100 ETF won the ‘Most Innovative ETF Asia Pacific 2011’ award at the

8th Annual Global ETF

‘Most Innovative Fund of the Year’ award at the

Investment Banking bagged ‘Asia Pacific Cross-Border

CNBC TV18-CRISIL Mutual Fund Awards 2011 for the

Deal of the Year’ and ‘India M&A Investment Banker’

Ranked as No. 1 Broker in India at the ETStarmine Analyst Awards, 2009

Others

‘Excellence in HR through ‘Quality Excellence Tech’ and ‘Excellence in for Best Customer ‘Best Growth Capital Healthcare’ awards at Service Result’ Investor-2012’ award Asia’s Best Employer award at National

Private Equity won

at the Awards for PE Brand Awards 2011 in

Quality Excellence

Corporate Overview

Businesses

Strategy

Performance

Industry facts

●

●

  Equity Participation   Investment Banking & Private Equity

●

 Mutual Funds

●

 Wealth Management

Options boost market ADTO yet again, Delivery up within cash Market ADTO hit a high this year, led by the continued growth in options, Absolute volumes of cash dipped, largely due to the decline in intraday segment ( Bn)

Options continued their dominance and comprised 76% of market ADTO; Proportion of cash to overall volumes dips further, reaches 8% of total volumes in the year

1,679

5%

6%

1,431

19%

1,335

350

612

39%

1,274

47%

977

163 374

388

176 50

124 35 FY9 Options

Source: NSE, BSE 

133 50

16%

29%

57%

291

2% 5%

3% 7% 22%

20%

950

764

4% 10%

76%

68%

37%

315

27%

275 92 39

101 39

FY10 FY11 FY12 Futures Intraday

FY9

FY13 Delivery

FY10

Deliv ery

On a YoY basis, the proportion of delivery within market cash volumes picked up this year

FY11

Intraday

FY12 Futures

FY13

Source: NSE, BSE 

Options

On a YoY basis, proportion of options within F&O volumes continued to grow 18%

28%

72%

FY12

24%

30%

70%

FY13

Delivery to Cash Volume s

Intraday to Cash Volume s

FY13

FY12 76%

82%

Futures to F&O Volumes

Options to F&O Volumes

Retails’ proportion dips; FII inflows and DII outflows continue Proportion of retail to cash volumes dipped as retail cash ADTO declined; Proportion of FII to cash volume picked up 6% 15% 26%

6% 12% 25%

7%

8%

9%

15%

18%

19%

22%

Strong inflows from FIIs this year was a major catalyst to participation, Net inflows were highest in the months of Sep, Oct, Dec, Jan and Feb ( Bn) 1,400 1,102

23%

1,101

23% 437

53%

57%

56%

51%

49% FY09

FY10

FY11

FY12

FY13

-479 Source: NSE, BSE 

FY09

FY10 DII

FY11 FII

FY12 Prop

FY13

Source: SEBI

Retail

DIIs saw net outflows in each of the three quarters since Q2 FY13 in this year, Mutual funds saw redemptions as equity investors pulled out ( Bn)

Growth in new demat accounts (Mn) at its slowest since the last five years, as primary market activities largely dried up 8% CAGR

600

1.8

0.9

1.0

19.0

20.0

2.0

1.0 242

FY09

FY10

-187

-53

-691

FY11

FY12

FY13

15.2

14.2

FY09

17.2

FY10

Ex ist in g Ac co un ts (Mn ) Source: NSE 

FY11

FY12

FY13

Ne w Ac co unt s (Mn)

ECM sluggish, DCM flat, PE and M&A faced challenges ECM remained sluggish, IPOs and Rights largely dried up, Additional saw an increase due to higher activity levels in Offer for Sale issues ( Bn) 156

1,156

809

740

468

DCM volumes still saw some activity as compared to earlier years, But the last couple of quarters saw a number of companies deferring debt raising plans ( Bn) 2,883

8%

4,829

5,568

 

5,278

5,967

15%

14%

34%

51%

55%

39%

40%

34%

31%

38%

44%

FY09

FY10

FY11

FY12

FY13

26%

16%

22%

52% 72%

73%

82%

78%

39%

7% 7% 14% FY09 Source: Bloomberg League Tables

41%

21% FY10

FY11

Additional (FPO)

14% 13%

10% 9%

FY12

FY13

Rights

IPO

M&As faced challenges due to high interest rates and uncertain economic outlook; Inbound deals saw major growth (US$ Bn) 12.0

32%

49.8

38.8

43.4

35%

Dom Bonds

1.10 0.81

0.84 456

45% 27%

314

1.09 0.85 421

428

FY12

FY13

258

27%

56% 37%

19%

Source: News article on Thomson Reuters report 

Loans Mandated

CY09 CY10 CY11 Domestic Outbound

28%

CY12 Inbound

Source: Bloomberg League Tables

PE investments were impacted this year by limited quality deployment opportunities, uncertain economic outlook and slower exits of existing holdings

18% 52%

12%

Loans Mandated (For)

FY09

FY10 Deal Va lue (Rs Bn)

FY11

Aver ag e Dea l Si ze (Rs Bn)

Equity funds AUM down, while Income/Gilt/Gold AUM rise MF AUM saw a dip in equity assets as equity funds saw redemptions, Gilt, gold and income fund assets saw an uptick ( Bn) 4,173

6,140

1%

3% 22%

5,923

2%

13%

12%

14%

3%

0.13%

13%

50%

47%

56%

0.05%

28%

35%

FY09

FY10

Gi lt, Gol d & Other s

0.12%

0.11% 0.08%

49%

51%

7,014

5,872

3%

ETFs continued to grow in CY2012, led by Gold ETFs, while equity ETFs declined in line with market movements

36%

34%

FY11

FY12

Li qui d / Money Ma rket

27%

FY13

I ncom e

E qui ty

2.5

2.4

2012

Mar-13

1.7

0.5

1.2

2009

2010

2011

India ETF AUM ($Bn)

India ETF % to Global ETF AUM

Source: AMFI

Source: AMFI/Blackrock report 

Individual wealth in India is estimated at 92.3Tn in FY12, led by the fixed deposit/bonds, equity and insurance sectors

Asset-wise wealth classification (as of 2011) shows Equity currently comprises a much lesser proportion in India than the Global average Global

FY 12

25%

3%

0.3% 6% 6%

25%

20%

14%

92

India 62%

FY 11

Source: Karvy Wealth report

31%

3%

30%

0.3% 18% 5% 6%

FDs/Bonds

MF

Equity

PF

68%

7% 86

Alternate Assets

Small Savings

Insurance

Savings Dep

0.3%

2.8%

32% 36%

Source: Karvy Wealth report