Looking at treasury book in short term means people don’t understand their business the focus should be operating profits in a cycle. treasury book again should be seen at 5 year CAGR.
As Motilal Oswal declared a loss in Q4 against all expectations, small investors are at a loss to understand it’s significance and future prospects.
I request Experts to clarify the significance in details.
I am no expert but I will try to share my understanding here.
There are two elements of earning for MOFS.
1.Operating
2.Treasury
Treasury profit/loss depends on equities as they have invested approx 8K+ Cr in these instruments. They have to book MTM gain/loss depending on movement in that Quarter.This makes this part of earning lumpy.
Operating business consists of broking,wealth and asset management,nbfc and capital markets.This part of business is cyclical as it depends on equity market conditions.Most interesting of them is wealth and asset management and there maximum value lies. This part of business has scaled in a big way in last few Qs.
So oprating business has done great but treasury loss is making it look very bad.
I hope this helps.
The reason why i have posted results in 2 manners is because of this. The lower result, the one w/o the treasury operations tells us that they have also faced certain issues in operations due to changes in regulations and markets falling.
I am amazed with how AMC business has grown they had net inflow of 40,000 Cr just few years back AUM was around this amount. The market share of Equity AUM and SIP has doubled. Offcourse the money has come at peak of market so for near team there performing Mutual funds may struggle in case there is bear market for couple of years but this probability is low. Motilal has used this time to double down on investment in people and this will keep its engine growing. They have 2000 cr of Operating PAT.
Disclosure: I am invested and my views may be baised.
Hi everyone, Does Motilal Oswal share the list of treasury investments ? I have scanned through the annual report- havent been able to find.