Motilal Oswal Financial Services


#106

too late for downgrade now. Equity holders started pricing in the HFC debacle almost 6 months back. This is the time to look forward.

Disc - invested and adding below 800


(abeni) #109

Slightly different topic: Accounting of unrealised gains in MOSL under new accounting standard i.e. Indian Accounting Standard (Ind AS) 19.

MOSL has significant unrealised gains from their investments in their own MF products. They have been selling parts of their MF products over the last few years and the capital gain has been a part of PAT (approx 100-150 crs). However under the new accounting standard the unrealised gains/losses are to be shown as profit or loss which may affect the reported profits. Below is an example:

  • Lets assume MOSL invests 100 cr in their own MF products on Jan 1 2017 say at a NAV of Rs 20.

  • Lets assume the NAV was Rs 30 on March 31, 2018 and NAV was Rs 25 on June 30, 2018.

  • Using the above NAVs the Market value of investment on March 31, 2018 was 150 cr and Market value of the investment was 125 cr on June 30, 2018.

  • Under previous accounting standard MOSL had an unrealised gain of 50 cr on March 31, 2018 and 25 cr on June 30, 2018 and they have been booking a part of it which shows in PAT.

  • However under the new accounting standard the unrealised gains/losses will form a part of PAT and for the Quarter ending June 30, 2018 they had an unrealised loss of 25 crs (150 cr to 125 cr). Since they have to report it as a part of PAT they now have to show it as a loss whereas they were showing a part of it as profit earlier.

Above is just my thought process but I am not a Charted Accountant and can be completely wrong. May be our accountant value pickers can chime in.

On the business side nothing much has changed. Though the inflows in their flagship focus 35 scheme has approximately halved over past few months. Maybe a market wide trend.

Disclosure - Not invested. Tracking.


(Batterinram) #110

For most of the companies Q4 (March Year end) results are always later than other quarters so that date cannot be used estimate the probable result date for other quarters. Last year Q1 (June) results were released on July 27th, so this year there is a definite delay. Not sure if we should be worried but this is certainly an anomaly.


(murugu selvan) #111

They have to shift to Ind AS from this qtr; thats the reason for the delay. For them, its easier to predict the results of others than working out their own numbers.:grinning::grinning::joy:


(murugu selvan) #112

Its getting worser for motilal in HFC front


(Chirag) #113

Results on 21st August.


(Growth_without Debt) #114

Q1FY19 result out.
Presentation https://www.bseindia.com/corporates/anndet_new.aspx?newsid=94739cdd-179a-4f23-8378-e9d371f0c15b


(Chirag) #115

I was not able to find the PL statement for Q1 results on BseIndia.com


#116

All around good performance except housing which was known. I think few more quarters of high provisioning in housing fin. is left. Accounting treatment of fund based gains was an eye opener for me. I thought it (~6bn) will come in P&L but they have directly taken it into the balance sheet leading to substantial jump in book value (to 3k cr). Fund based gains will largely be MTM gains/losses for the quarter and will remain volatile. e.g. Q2 should be great for fund based gains.

@investr check consol results on their website. I think tax adjustments for prior period has optically depressed PAT. Despite headwinds and volatile market conditions this outcome is satisfying.

http://motilaloswalgroup.com/Downloads/IR/1562270294Consol.pdf

disclosure : Invested


(Growth_without Debt) #117

#118

This rumour is quite believable given the fact that one promoter has pushed it into housing finance while all other divisions related to equity biz continue to do quite well. However, they have a lot to lose if the disruptive break up happens.

Disc: Invested


(Marathondreams) #119

Disc - not invested. tracking


(Balusu Aditya) #120

Record date for Final dividend(Rs 4.5/-) : September 21, 2018.
Amount will be credited/dispatched on or before October 22, 2018.

AGM on September 27, 2018


(Julian) #121

Go for unrelated diversification and you have Aspire like situations. The top 5 housing companies have cornered 85% of the market with their credit rating as moat. The top 5 concentrate on the 25 lakh plus salaried category, while the bottom 80 scrape the lower 15% consisting of low income groups. What they require is an efficient man at the top. And they need to give the loan to credit worthy borrowers. Piramal a new player has a different approach. Piramal has a unique loan distribution strategy where the repayment amount keeps pace with the increase in salary.

Motilal is the best professionally run equity AMC. It is the hen which lays the golden eggs and doesn’t need capital to grow. Aspire was Motilals attempt to use the Surplus cash a la Bajaj finance and also to have a regular income during stock market crash. But they don’t seem to have read the housing market carefully before entering it.


#122

(Julian) #123

In the interview Raamdeo makes it clear that asset management will be a 100 lakh crore industry in 2028 and MOFS cannot handle more than 1 to 2 lakh crores. Stupendous opportunity. Do not know why they are spending so much management bandwidth on housing finance, when the scope in asset management itself is infinite. Hope good sense prevails .


(jajushobhit) #124

I agree. The management has been downplaying the Aspire wreck by saying that it contributes ~20% to PAT, but what about capital? The business sucks large part of capital. As you have rightly mentioned the rest of businesses require almost no capital, such disaster in a capital heavy business just crashes the ROEs. However, I expect the AMC business to continue to outperform.

Disc: Invested
SJ


#125

Aspire was Ramdeo’s idea and in one of his interviews he had said they were fascinated by the high p/b multiples of Gruh finance that resulted value creation so he got greedy. But poor biz sense showed its effect earlier than expected. I am still scratching my head how could they set up an HFC without legal and recovery support. The point is even Motilal Oswal got involved when things got worse. Big lesson is that not every successful Buffet fan can run an operating business like him.

Invested but keep evaluating.


(sarvajeet) #126

What will be the impact of SEBI expense ratio on their PAT?
What will be the impact of 100 basis point increase in interest rates on their PAT in Aspire?


(Batterinram) #127

Impact of SEBI regulation will be marginal considering close to 50% of AUM is PMS/AIF which wont get impacted. In their Mutual Fund business only one scheme which has a AUM of over 10000 crore will be impacted a little (higher the AUM greater the impact). Even in that scheme only the regular plan portion (64% of the business will be affected). So as per my estimate out of 38000 crores in AUM only 14000*64%= 8960 crores will be impacted.