Motilal Oswal Financial Services Company analysis

Industry profile: India has a diversified financial sector undergoing rapid expansion, both in terms of strong growth of existing financial services firms and new entities entering the market. The sector comprises commercial banks, insurance companies, non-banking financial companies, co-operatives, pension funds, mutual funds and other smaller financial entities. The banking regulator has allowed new entities such as payments banks to be created recently thereby adding to the types of entities operating in the sector. However, the financial sector in India is predominantly a banking sector with commercial banks accounting for more than 64 percent of the total assets held by the financial system. The Government and Reserve Bank of India (RBI) have taken various measures to facilitate easy access to finance for Micro, Small and Medium Enterprises (MSMEs). These measures include launching Credit Guarantee Fund Scheme for Micro and Small Enterprises, issuing guideline to banks regarding collateral requirements and setting up a Micro Units Development and Refinance Agency (MUDRA). With a combined push by both government and private sector, India is undoubtedly one of the world’s most vibrant capital markets.

Driven by strong participation from retail investors and creation of awareness by Securities and Exchange Board of India (SEBI), equity mutual funds driven by strong participation from retail investors and creation of awareness by Securities and Exchange Board of India (SEBI), equity mutual funds witnessing large inflows which were kept in banking system before 2017. The revenues of the brokerage industry in India are estimated to grow by 15-20 percent to reach Rs 18,000-19,000 crore (US$ 2.80-2.96 billion) in FY2017-18, backed by healthy volumes and a rise in the share of the cash segment.

The Indian life insurance industry has begun to recover and is likely to report 12-15 percent growth in FY 2016-17.

In 2016, 2.4 million new Demat accounts were opened by Indians, the highest number of account openings since 2008, led by a higher number of initial public offerings (IPOs) and greater interest in mutual fund investments. SBI, the second largest issuer of credit cards in India, has reported the issuance of 115,000 new cards in December 2016, post demonetization, taking its total card issuance to 4.75 million.

Company Profile: The company being Financial Services Operating in so many businesses. the company was founded in 1987 by Mr. Motilal Oswal and Mr. Ramdeo Agrawal, started as Brokeing company. Now they are doing business in Home Finance, Retail Broking, Asset management, Retail Broking, Investment banking, Institutional Equity, Private Equity, Private wealth management. Home finance, Brokerage and Asset management at large contribute nearly equal Portion in company’s Revenue. the company is well-known brand among retail and wholesale investors

Shareholding pattern: 17 promoter entities holding 70.73%. Mutual funds hold 0.61%. Financial Institutions hold 0.01%.Foreign investors hold 14.86% Remaining held by retail investors.

financials and ratios 

 2010 - 112011 - 122012 - 132013 - 142014 - 152015 - 162016 - 17
Revenue600.76465.53472.88468.27775.431,079.601,808.71
Net profit139.50104.17109.0939.50143.58169.08359.97
NPM23.22522.37%23.06%8.43%18.51%15.66%19.90%
EPS10783101225
Book Value73.7278.9384.0685.0792.83102.18125.61
Dividend per share1.401.502233.52.5
Dividend payout15.7120.9626.6369.1929.2229.429.96
ROE12.939.108.953.3711.0811.7720.15
ROA9.076.726.152.164.873.324.26
Debt to equity00000.611.652.6
Asset Turnover39.0729.8626.2025.0126.2120.7220.45

Future prospectus: From very early days as a broker to today’s Diversified business, This company is an example of how to grow in financial services. Raamdeo Agarwal well-known investor and famous for his stock picking strategies. In Indian markets, 2018 is expected to be the year of Asset management companies. One is listed, some others are preparing to list themselves. In such time, Motilal Oswal Financial Services is one good business. I don’t know whether they will list their Mutual fund business or not but even in today’s form, It is good company. Final thing from my end, When there are two eminent investors are promoters of company then they know how to run the company

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About Ashutosh Tilak

Tracking Indian Capital Market since 2010. Finance Student, On this blog I am writing about finance and Investing. You can contact me analystashu@gmail.com or @androidashu & @InsideFinanc on twitter