Motilal Oswal Financial Services Limited

Transcription

1 Motilal Oswal Financial Services Limited Motilal Oswal Financial Services Limited BSE: NSE: MOTILALOFS Bloomberg:MOFS:IN Reuters: MOFS.BO

2 Corporate Overview Businesses Strategy Performance Industry facts

3 Corporate Overview Businesses Strategy Performance Industry facts Group Profile & Structure Evolution Our Businesses Our Strengths Corporate Governance Management Team

4 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 548 cities comprising 1,565 business locations operated by our business partners and us with 749,745 total registered customers Shares listed on the Bombay Stock Exchange and National Stock Exchange in Mumbai Motilal Oswal Financial Services Ltd. (MOFSL) 99.95% 93.75% 85% 99.95%* 97.55% Motilal Oswal Motilal Oswal Investment Motilal Oswal Private Motilal Oswal Asset Motilal Oswal Commodities Securities Ltd. Advisors Pvt. Ltd. Equity Advisors Pvt. Ltd. Management Co. Ltd. Broker Pvt. Ltd. Institutional Equities Broking & Distribution Wealth Management Investment Banking Private Equity Fund Real Estate Fund Portfolio Mgmt Services Mutual Funds Offshore Funds Commodity Broking * through Motilal Oswal Securities Limited Data as on June

5 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

6 Our Businesses Broking & Distribution Private Equity Independent and INSIGHTFUL RESEARCH Institutional Asset STRONG RELATIONSHIPS with institutional investors and high net worth investors Equities Management (HNIs) Well established HIGH CREDIBILITY resulting in DISTRIBUTION NETWORK Investment Banking Wealth Management higher cross-selling opportunities Principal Strategies INTEGRATED FINANCIAL SERVICES PROVIDER 6

7 Our Strengths Strong Brand Name Strong Investment Culture Experienced Top Management Strong Risk Management Practices Independent and Insightful Research Financial Prudence Leadership in Franchisee Business Large Pan-India Distribution Network 7

8 Corporate Governance MOFSL is committed to ensuring compliance with the best practices in corporate governance Composition of MOFSL s Board of Directors: o The Board currently consists of 6 members with 50% composition of Independent Directors MOFSL has six major Board level Committees : Independent Directors Balkumar Agarwal 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 o o o o o Audit Committee Shareholders / Investors Grievance Committee Remuneration / Compensation Committee Nomination Committee Risk Management Committee ESOP Committee 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 External auditors play a role in providing an independent assessment of MOFSL s financial position 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 8

9 Management Team Chairman & Managing Director Motilal Oswal Joint Managing Director & Co-founder Raamdeo Agrawal Director Navin Agarwal Institutional Equities Navin Agarwal Research Rajat Rajgarhia Investment Banking Ashutosh Maheshvari Chief Operating Officer Ajay Menon Private Equity Vishal Tulsyan Corporate Affairs Harsh Joshi Broking & Distribution Vijay Goel Marketing Ramnik Chhabra Wealth Management A.V. Srikanth Chief Financial Officer Sameer Kamath Asset Management Taher Badshah Human Resources & OD Sudhir Dhar Principal Strategies Srikanth Iyengar 9

10 Building Infrastructure for the Future 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 MOFSL also expects to generate additional income from the sale of the existing owned office properties in Nariman Point, Mumbai, (approximately 20,000 sq feet) which would partly offset the additional capital outlay on the new property. Thus, MOFSL will be able to utilise significantly larger floor space at an incremental cost. Design of the Corporate Office in Prabhadevi, Mumbai 10

11 Corporate Overview Businesses Strategy Performance Industry facts Broking & Distribution Institutional Equities Wealth Management Investment Banking Asset Management Private Equity

12 Retail Broking and Distribution MOFSL offers customized investment services to retail clients, including equity & commodity broking and distribution of financial products Growing Customer Base Total registered client base of 749,745, including 659,274 retail broking and distribution clients The Customer first philosophy is executed through strategic focus on: o Increasing distribution reach and customer segmentation on individual client s needs o Wide bouquet of offerings (equity, PMS, MFs ) o Customer connect through seminars, feedback 541, ,062 Total Registered Clients 621,215 Retail Broking & Distribution Clients 550, , , , ,745 FY09 FY10 FY11 FY12 Jun , ,274 Pan-India Distribution Reach Developed a Pan-India network in 548 cities across 1,565 locations (branches + franchisees), while ensuring the quality of the locations at the same time Extensive distribution network provides opportunities to cross-sell products 548 1,289 Distribution (Locations & Cities) Locations 568 1,397 Cities ,644 1,579 1,565 Knowledge First for Client Engagement 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 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 FY09 FY10 FY11 FY12 Jun 2012 FY09 FY10 FY11 FY12 Jun

13 Retail Broking and Distribution Partnering For Growth Franchisee Model Apart from branches, MOFSL also operates a franchisee-based business partner model Some of our Business Partners have grown manifold in terms of scale of business Operates Upper MOST, an interactive online tool for business development, reward, recognition for business partners Enhancing the Technology Experience Developed feature-rich and user-friendly online and mobile trading platforms Lite-Desktop (EXE Based Trading): Two-Factor Authentication for the platform Reduced bandwidth requirement One of the lightest EXE based applications in the industry Rate refresh speed further optimized Portfolio Review tool The new Portfolio Review service enables customers to review investments and take steps to realign the investments to their original financial goals My Motilal Oswal, a new web service using a unique widget framework that allows users choose and customize the information on the screen as per their preferences Strong Advisory Infrastructure Recent equity strategies like MOSt Velocity etc saw good response from investors. This is a structured advisory process that recommends stocks to extract value out of market momentum. 13

14 Institutional Equities: Research is our Strength Provides equity cash and derivatives brokerage services for institutional clients Client base of 517 institutions including 348 FIIs, as of Mar 2012 Strong research team comprising of 26 analysts covering more than 175 companies across over 20 sectors and 28 commodities Research report portfolio encompasses economic, sector, company and thematic studies Sales team supported by strong Corporate Access Annual Motilal Oswal Investor Conference The 7th Annual Conference was conducted in Aug, 2011 in Mumbai. Over 100 leading Indian companies interacted with over 500 institutional clients from across the world Our Research has won Awards consistently, recent being:- Won awards at the Zee Business India s Best Market Analyst Awards 2011 and 2012 Won 4 awards at the ET-Now Starmine Analyst Awards 2010 placing it amongst the Top 3 award winning brokers Ranked 2 (Best Local Brokerage) by the AsiaMoney Brokers Poll 2010 and 2009 Rated No.1 (Best Recommendations Mid & Small Caps) and won awards in 3 out of 4 categories at the Starmine India Broker Rankings 2009 from Thomson Reuters Ranked 2 (Best Indian Broker 2009) by Institutional Investor No.1 Broker in ET Now-Starmine Analyst Awards 2009 ET Now Starmine Analyst Awards 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 14

15 Institutional Research Products Sample Research Products Providing vivid and deep insights into Indian Equities Recent Research Reports 15

16 Annual Wealth Creation Study MOSL conducts the Annual Wealth Creation thematic study, which analyzes bestperforming stocks. The 16th Annual Wealth Creation Study was conducted in Dec, The presentation was followed by a Panel Discussion on the Future of Investing. The study identified Reliance Industries, Sanwaria Agro and Kotak Mahindra as the biggest, fastest, consistent wealth creators, respectively It showed the contribution of the top-10 wealth creators declined from 76% in 2003 to 42% in 2011, indicating a more widespread wealth creation Theme of this study was on Blue Chip Investing Creating Wealth from Dividends Blue-chips were identified as well-established, financially sound companies entrenched as leaders in their field, generally paying high dividends Rationale is that good quality companies with strong dividends offer as much, if not more, investment potential than poor quality companies and with less risk Screening based on earnings and dividends history, RoE, liquidity, institutional shareholding identified 48 potential blue-chip stocks The 16th Wealth Creation report can be downloaded by clicking on this link 16

17 Wealth Management Focus on advisory and product mix that leads to Client Profitability Advises on in-house products like PMS, PE, MOSt funds, equity broking and third party products like mutual funds, insurance and structured products, as well as a variety of alternate investments, specialist services and credit offerings Wealth management business had an AUM of`15.6 billion, as of June employees in wealth management business, as of June 2012 The wealth management business has been strengthened with the joining of A.V. Srikanth as CEO. Prior to this, he was with Anand Rathi Private Wealth Management, 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. He also developed India s first Multi-Manager platform in partnership with external service providers Present in Mumbai, Delhi, Kolkata, Bangalore, Hyderabad, Ahmedabad and Pune Asset Structuring Wealth Management Investment Advisory In-depth analysis of financial situation Tailor-made investment solutions Advice & support for asset structuring Asset financing Strategic & tactical asset allocation Enhanced yield mandates Estate planning & property management Strategy funds Market information & macro analysis Product selection & recommendations Selection of third-party funds Portfolio accounting and analytics 17

18 Investment Banking Strong management team with substantial experience in investment banking, corporate banking and advisory Recent Transactions 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 transactions, Motilal Oswal Investment Banking was the Lead Sponsor for the Latin America India Investors Forum held in Mumbai in Nov This Forum was designed to connect corporates with institutional investors and start the process towards deals and business relationships between India and Latin America. Fund-raising and deal activities remain sluggish this year due to the global slowdown, uncertainties reg government policies, poor performance of equity markets, and high borrowing costs Latin America India Investors Forum 2011, Mumbai 18

19 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 Jun 2012, PMS AUM was `13.9 billion As per SEBI data, our PMS had a market share of 8% in terms of discretionary-listed equity PMS assets, as of Aug 2011 Our flagship Value strategy has significantly outperformed the benchmark index Nifty, consistently over shorter and longer time periods PMS AUM (`Mn) Mutual Funds business (MF) Mutual funds AUM was `4.8 billion, as of Jun 2012 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 o MOSt Shares Nasdaq 100 ETF (N100) is India s 1st US equities based ETF, denominated in Indian Rupees 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 12,584 13,574 13,897 Mutual Funds AUM 4,767 9,817 Mutual Funds AUM (Rs Bn) Gold ETF 5% M50 ETF 17% FY09 FY10 FY11 FY12 Jun Yr Gilt Fund 43% June 2012 AUM Rs 4.8bn Midcap 100 ETF 23% Nasdaq 100 ETF 12% 19

20 Motilal Oswal MOSt Shares ETFs Motilal Oswal MOSt Shares ETF Conclave Conducted the 2nd MOSt Shares ETF Conclave in June 2012 The objective was to demystify ETFs for Indian investors by discussing the advantages of ETFs and passive investing, building portfolios with ETFs and Vanguard s success in this space 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 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. This was followed by a panel discussion between James Norris, Frank Satterthwaite (Head Corporate Strategy, Vanguard) and Anup Bagchi (MD and CEO, ICICI Securities) Launch of MOSt Shares Nasdaq 100 ETF MOAMC became the first Indian AMC to ring the opening bell at NASDAQ in USA during the launch of the Nasdaq 100 ETF 20

21 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, which has been fully committed across 13 companies India Realty Excellence Fund (IREF) is a domestic real estate fund with total AuA at `2 billion. IREF has made investments across 6 deals, committing about 74% of its funds under management, as of June 2012 MOPE achieved commitments of `4.9 billion from both domestic and offshore investors after the second closing of its 2nd sector-agnostic growth capital PE fund, India Business Excellence Fund-II (IBEF II) MOPE also organized Annual Investor Meets for its IBEF and IREF in May 2012 Investment Process Nurturing Process 21

22 Corporate Overview Businesses Strategy Performance Industry facts Size of opportunity Our Strategic Focus Progress Against Strategy

23 Size of Opportunity India s equity broking opportunity: Market size in terms of revenue pool expected to grow 6 times over the next 10 years 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 6.2x Growth Assume trading velocity to double from current 37% to ~80% by 2020 This gives a expected market size of ~`697Bn by 2020, comprising `243Bn in institutional and `454Bn in retail segment Source: MOSL estimates FY 2010 Institutional (Rs Bn) 243 FY 2020E Retail (Rs Bn) Factors that will help achieve this growth Sustained economic, savings and discretionary income growth 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 What Motilal Oswal is doing to create scale 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 Although certain external risks remain 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 23

24 Our Strategic Focus Leverage research and advisory capabilities Investor education and knowledge dissemination Good quality Pan-India distribution network Strengthening Wealth Mgt s product Increase Retail / bouquet and customized advisory Wealth Mgmt share Leveraging on technology Distribution of 3 rd party products Grow Fee based revenues Develop innovative, market-access products for the AMC platform Grow the Investment Banking business Ensure quality deal flow for Private Equity KNOWLEDGE FIRST Increase Research support Build strong institutional relationships through wider and quality research Grow institutional derivatives business Increase Institutional market share Solid Research Solid Advice Risk-Free Balance Sheet and Grow Fund based revenues Use Principal Strategies Group to maximise returns using risk free arbitrage strategies Grow the Capital Markets Lending book across client segments to complement our 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 24

25 Progress Against Strategy Research Consistently won awards for earnings estimation and best recommendations, thus showcasing our strong research capabilities 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 Retail Distribution Reach Grew the Pan-India distribution presence further, currently stands at 1,565 locations across 548 cities Empanelment of Institutions Added to the number of domestic and foreign institutions empanelled Corporate Access The Annual Motilal Oswal Investor Conference is reckoned as one of the best-in-class conferences in India for institutional investors Technology Tools and Platforms Successfully developed and implemented a number of techbased initiatives, including in-house developments Wealth Management Product Bouquet Strengthened Wealth Management s product portfolio to offer multiple investment options and a holistic asset allocation for clients Asset Management business Launched 5 innovative mutual funds, all of which were India s Firsts in terms of the market access provided by the investment products strategies Private Equity businesses Strong on-ground relationships helped achieve a healthy portfolio for existing funds and ensure good mobilization for the new fund 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 25

26 Corporate Overview Businesses Strategy Performance Industry facts Financial Performance Recent Awards

27 Annual Financial Performance at a Glance Consolidated revenues (` million) EBIDTA (` million, margin %) Reported PAT (` million, margin %) 6,995 4,661 6,453 6,008 4,655 39% 39% 2,696 1,807 43% 2,770 38% 2,295 1,562 34% 22% 1,561 20% % 1,704 23% 22% 1,371 1,039 FY08 FY09 FY10 FY11 FY12 FY08 FY09 FY10 FY11 FY12 FY08 FY09 FY10 FY11 FY12 Net worth (` million); Return on Avg NW (%) Net Cash (` million) Revenue Composition (%) 7,090 30% 7,939 12% 9,460 20% 10,595 14% 11,409 9% 2,857 5,428 3,250 2,772 2,710 2% 4% 2% 3% 2% 1% 5% 5% 6% 7% 11% 9% 14% 10% 13% 18% 10% 10% 7% 2% 80% 70% 71% 72% 69% FY08 FY09 FY10 FY11 FY12 FY08 FY09 FY10 FY11 FY12 FY08 FY09 FY10 FY11 FY12 Others Asset management fees Funds based business Broking & operating income Investment banking fees 27

28 Latest Quarter Performance Particulars Q1 FY13 Q4 FY12 Change Q1 FY13 Q1 FY12 Change FY12 ` million Jun 30, Mar 31, (%) Jun 30, Jun 30, (%) Mar 31, Q-o-Q Y-o-Y 2012 Brokerage & operating income % % 3201 Investment banking fees % % 86 Fund based income % % 822 Asset Management Fees % % 504 Other income 10 0 nm % 42 Total Revenues % % 4655 EBIDTA % % 1562 PBT (before E & EOI) % % 1396 Reported PAT (after E & EOI) % % 1039 Adjusted PAT % % 1028 Operating costs% 25% 27% 25% 24% 25% Personnel costs% 23% 25% 23% 25% 24% Others% 19% 17% 19% 20% 17% EBIDTA% 34% 32% 34% 31% 34% PAT% 19% 17% 19% 19% 22% Adjusted PAT% 19% 23% 19% 19% 22% E & EOI = Exceptional items & Extraordinary items, EOI = Extraordinary items 28

29 Balance Sheet ` million Sources of Funds As on Jun 30, 2012 As on Mar 31, 2012 As on June 30, 2011 Networth 11,633 11,409 10,840 Loan funds Minority interest Deferred tax liability Total 11,710 11,500 11,087 Application of Funds Fixed assets (net block) 3,291 3,445 2,985 Investments 1, Deferred tax asset Current Assets (A) 11,287 11,062 11,139 - Sundry debtors 2,347 2,478 2,666 - Stock-in-trade 2,626 1,574 2,291 - Cash & Bank Balances 1,694 2,710 1,799 - Loans & Advances 4,589 4,253 4,202 - Other Assets Current liabilities (B) 3,971 3,948 3,791 Net current assets (A-B) 7,316 7,114 7,348 Total 11,710 11,500 11,087 ` million As on Jun 30, As on Mar 31, As on June 30, Networth 11,633 11,409 10,840 Debt (A) Cash & Bank balances (B) 1,694 2,710 1,799 Net cash (B - A) 1,694 2,710 1,605 Debt : Equity 0.00x 0.00x 0.02x Cash (% Networth) 15% 24% 17% MOFSL s strategy of maintaining low gearing has helped sustain strong performance in the high interest rate scenario 29

30 Recent Awards Exisiting 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 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 Ranked as No. 1 Broker in India at the ET-Starmine Analyst Awards, 2009 New Businesses: NBFC, Asset Management and Investment Banking Corporate Communications and Human Resources Best Capital Markets and Related NBFC award at the CNBC TV18 India Best Banks and Financial Institutions Awards 2011 Nasdaq 100 ETF won the Most Innovative ETF Asia Pacific 2011 award at the 8th Annual Global ETF Awards 2012 in USA Most Innovative Fund of the Year award at the CNBC TV18-CRISIL Mutual Fund Awards 2011 for the M-50 ETF Investment Banking bagged Asia Pacific Cross-Border Deal of the Year and India M&A Investment Banker awards Best Use of PR in Financial Services award at the India PR & Corporate Comm Awards 2012 Excellence in HR through Tech and Excellence in Healthcare awards at Asia s Best Employer Brand Awards 2011 in Singapore Best Employer Brand Award at the IPE Banking, Financial Services & Insurance Awards

31 Corporate Overview Businesses Strategy Performance Industry facts Indian Long Term Economic Growth Capital Markets Equity Participation Investment Banking & Private Equity Mutual Funds Wealth Management

32 India s Long Term Growth Story a Boon for Financial Services India s nominal GDP estimated to triple from current levels to reach ~US$5 Tn by ,870 Indian GDP outperformed both emerging and advanced nation groups; Inflation receding 12% Indian GDP is also projected to continue outperformance, close the gap with China GDP 5 year CAGR P 5 year projected CAGR % CAGR 8% 9% 11% 10% % CAGR 1,314 4% 0% % FY 2000 FY 2010 FY 2020E India GDP (US$ Bn) -4% India inflation (avg consumer prices) Advanced econ GDP Emerging/developing econ GDP China GDP India GDP Advanced Emerging/developing 2016 China India Source: MOSL estimates Source: IMF data Source: IMF data A high savings oriented country, India s gross savings to increase to 40% of GDP by 2020 This translates into cumulative decadal savings of over US$10 trillion for the decade to 2020 Proportion invested into equities is still low - indicating headroom for growth 32% % CAGR 34% 15% CAGR % 1,948 US$ 2 Trillion 0.8 US$ 9 trillion Others Shares & Debentures Currency Life Insurance Fund Bank Deposits 36% 35% 5% 2% 8% 9% 13% 15% 37% 39% 15% 16% 1% 7% 12% 9% 17% 23% 51% 48% FY 2005 FY 2010 FY 2020E India's GDS (US$ Bn) % to GDP 1990s 2000s 2010s FY00-FY02 FY03-FY05 FY06-FY08 FY09-FY11 Source: MOSL estimates Source: MOSL estimates Source: RBI data 32

33 Strong Performance in Indian Equity Markets Following its economic growth, India s equity market cap ($Bn) has grown at a brisk pace India is now rising in significance in the global context on a proportion basis As India s equities market grows, its trading velocity will align towards global markets 1.8% 1.5% India's Share to World Average 2.6% India's share in World GDP 0.4% 1.6% 2.1% BSE's share in World Mcap % 250% 200% 150% 100% 50% 0% 194% 160% 139% 69% 57% USA (NYSE Euronext) Korea (Korea Exchange) India (BSE & NSE) UK (London SE) China (Shanghai SE) Source: BSE data Source: WFE, BSE, IMF data Source: WFE data Participation in Indian equities was led by increasing trend in FII net inflows ($Bn) increased mobilization via primary markets (`Bn) which boosted retail participation And India s MF assets, which has been growing in its proportion to world MF assets % CAGR FY FY FY FY FY FY FY 2008 FY FY 2010 FY FY % CAGR FY 2000 FY 2005 FY 2010 IPOs Listed Issuers (FPOs) Source: SEBI Source: SEBI Handbook 2010 Source: ICI Factbook 2012, AMFI 33

34 Options leads growth in equity market volumes, yet again Equity market volumes in Q1FY13 up with growth in the options segment, while delivery, intraday and futures saw a decline (`Bn) 1,335 1,431 1,334 1,504 1,594 With options volumes increasing further, it comprised 75% of overall market volumes in Q1FY13, while cash reduced to just 7% 37% 57% 68% 67% 67% 75% ,002 1, FY10 FY11 FY12 Q1FY12 Q4FY12 Q1FY13 Options Futures Intraday Delivery Source: NSE, BSE Within cash segment, the proportion of high-yield delivery to overall cash volumes has held constant 39% 29% 22% 23% 23% 19% 17% 10% 7% 8% 8% 5% 5% 4% 3% 3% 3% 2% FY10 FY11 FY12 Q1FY12 Q4FY12 Q1FY13 Options Futures Intraday Delivery Source: NSE, BSE With the continued decline in futures and increase in options, the proportion within F&O is further skewed towards options 27% 27% 25% 19% 73% Q4FY12 73% Q1FY13 75% Q4FY12 81% Q1FY13 Delivery to Cash Volumes Intraday to Cash Volumes Futures to F&O Volumes Options to F&O Volumes Source: NSE, BSE Source: NSE, BSE 34

35 Participants proportions flat despite cash vol drop; FII see net outflows While volumes of each participant segment in the cash market has declined this quarter, their proportions remained largely unchanged Flat QoQ performance in the benchmarks and worries over GAAR regulations impacted FII sentiments towards India (`Bn) 6% 7% 8% 7% 8% 8% 12% 15% 18% 18% 17% 17% 1,102 1,101 25% 22% 23% 22% 25% 25% % 56% 51% 53% 50% 50% FY10 FY11 FY12 Q1 FY12 Q4 FY12 Q1 FY13 Source: NSE, BSE FY10 FY11 FY12 Q1FY12 Q4FY12 Q1FY13 DII FII Prop Retail Source: SEBI DIIs, despite posting net inflows in 4 out of the last 5 quarters, are still in negative territory in terms of total net flows in this period (`Bn) Growth in new demat accounts (Mn) slowed down coinciding with muted retail participation and slowdown in primary market activity FY10 FY11 FY12 Q1 FY12 Q4 FY12 Q1 FY13 9% CAGR Source: NSE FY09 FY10 FY11 FY12 Jun-12 Existing Accounts (Mn) New Accounts (Mn) Source: CDSL, NSDL 35

36 ECM down; PE dips slightly; Domestic bonds/loans pull up DCM Equity raising continued to remain sluggish, with FPOs being the only segment that saw decent volumes, though at lower levels too (`Bn) Source: Bloomberg League Tables 1,694 1, % 9% 4% 3% 5% 0% 4% 22% 21% 49% 36% 68% 69% 89% 87% 5% 5% 13% 19% 15% 29% 12% 10% 1% 2% 4% 11% FY10 FY11 FY12 Q1FY12 Q4FY12 Q1FY13 Overseas Eq Offerings Additional (FPO) IPO QIP Rights M&A deal value in H1 CY12, down on a YoY basis, improved from H2 CY11 mainly owing to the Sesa-Sterlite merger in the Jan-Mar quarter (`Bn) Source: Grant Thornton 2,227 1,974 1,382 1,224 18% 45% 37% 64% 68% 25% 19% 12% 13% 20% 72% CY10 CY11 H1CY11 H1CY12 Domestic Outbound Inbound 9% Debt raising saw a slight increase on QoQ and YoY basis due to higher INR loans and domestic bonds volumes resp (`Bn) 4,641 5,838 5,093 1,087 1,040 1,285 8% 16% 22% 22% 14% 12% 52% 5% 1% 35% 30% % 39% 0% 38% 47% 1% 30% 31% 54% 47% 0% 41% FY10 FY11 FY12 Q1FY12 Q4FY12 Q1FY13 Loans Mandated (For) FCCB Loans Mandated Dom Bonds FY10 FY11 FY12 Q1 FY12 Q4 FY12 Q1 FY13 Deal Value (Rs Bn) Average Deal Size (Rs Bn) Source: Bloomberg League Tables PE deal values and avg value per deal marginally dipped as market conditions impacted fund raising plans, valuations and exits (`Bn) Source:: Venture Intelligence 36

37 Equity mutual funds assets hit; Gold ETFs boost India ETF AuM Mutual fund AuM picked up this quarter mainly owing to Liquid funds, as interest in Equities and FMPs waned a bit (`Bn) Gold ETFs lead the growth in Indian ETF AuM; Its proportion to global ETF assets continues to grow since last 3 years (US$ Bn) 4,173 6,140 5,923 5,872 6,888 3% 1% 2% 3% 3% 13% 12% 14% 22% 23% 0.09% 0.09% 0.12% % % 51% 49% 50% 46% 0.05% % 35% 36% 34% 28% Jun-12 FY09 FY10 FY11 FY12 Jun-12 India ETF AUM ($Bn) India ETF % to Global ETF AUM Source: AMFI Gilt, Gold & Others Income Liquid / Money Market Equity Source: Bloomberg/Blackrock report Individual wealth in India is estimated at `86.4Tn in FY11, led by the fixed deposit/bonds, equity and insurance sectors Individual wealth in India expected to reach `249Tn over the next 5 years Source: Karvy Wealth report 2011 Source: Karvy Wealth report

38 This report is for information purposes only and does not construe to be any investment, legal or taxation advice. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Any action taken by you on the basis of the information contained herein is your responsibility alone and MOFSL and its subsidiaries or its employees or directors, associates will not be liable in any manner for the consequences of such action taken by you. We have exercised due diligence in checking the correctness and authenticity of the information contained herein, but do not represent that it is accurate or complete. MOFSL or any of its subsidiaries or associates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this publication. The recipient of this report should rely on their own investigations. MOFSL and/or its subsidiaries and/or directors, employees or associates may have interests or positions, financial or otherwise in the securities mentioned in this report. Thank You Contact: Sameer Kamath Chief Financial Officer Motilal Oswal Financial Services Limited Tel: / Fax: sameerkamath@motilaloswal.com Sourajit Aiyer Sr. Manager Investor Relations Motilal Oswal Financial Services Limited Tel: / Fax: sourajit.aiyer@motilaloswal.com / investorrelations@motilaloswal.com