Q3-FY09 Results Update - Motilal Oswal Financial Services
Keynote Capitals presents update on the Q3-FY09 results of Motilal Oswal Financial Services Ltd., a diversified financial services company.
Motilal Oswal Financial Services Ltd. (MOFSL) announced results for Q3-FY09. MOFSL listed on Indian stock exchanges following its IPO in August 2007 with an issue price of Rs 825 per share. The stock price of MOFSL is down 92% vis-a-vis the IPO price.
Analysis of Q3-FY09 results
Non-broking segment failed to perform during the challenging times in capital markets
The management expected to continue traction from the non-broking business, which would help diversify the revenue base and capitalize on the emerging opportunities in those spaces. However, the non-broking revenue was also affected during the quarter.
- Investment banking was down by 93% and its contribution to the overall revenues has fallen sharply to 1%, the reason being the delay in closure of some mandated projects.
- Fund based income, second largest contributor to the total revenues and for which MOFSL raised Rs246Cr also could not grow. Fund based income had helped reduce the impact of market downturn in Q2, but not during Q3.
Cost optimization through all possible ways...
- Consolidation in the outlets
The outlet count stand at 1,428 compared to 1,553 the last quarter. The closure of the outlets is attributable to merging of the outlets to have cost efficiencies. It looks to enter into new cities but is merging outlets within city.
- Employee cost declined by 57% y-o-y and 32% q-o-q
Head count was reduced by 300 during the quarter and today stands at 1400. In the last quarter too, they had laid off 300 employees. Management states the staff removed was mainly temporary. Evaluations are carried out for the new hires that are likely to join soon.
Key concern
Retail market share declining continually over last 4 quarters
Q4 likely to remain difficult
Investment banking is under pressure during the difficult times. Many of the IB deals which could have been booked in Q3 and were in advanced stages are likely to be now delayed to Q4. There are chances of a few deals not even materializing. MOFSL has 12 mandates in the pipeline.
Way ahead
- Òî tap new businesses like mutual fund business
This segment is in initial stages and MOFSL will look to develop it further with more concrete strategy which will be visible in next 2-3 quarters. It has already got AMC license and the basic infrastructure set-up has been done. This business is still in formative stage.
- Going forward, management will consider more means of cost optimization.
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Indian stock market daily morning report (March 12, 2010, Friday)
Recovery in IT and bank stocks helped the Sensex close positive yesterday. Profit taking was witnessed in auto stocks which capped the gains. Market breadth was weak near about 0.6x. Asian markets are mixed today. While the Nikkei is up, the Hang Seng is trading with a moderate decline.
Indian stock market daily morning report (March 11, 2010, Thursday)
Indian markets corrected midway through the trading session yesterday on profit taking in technology stocks. However, a recovery in oil and gas and real estate stocks helped the Sensex to close marginally up. Market breadth was weak at around 0.7x. While FIIs bought equities worth Rs3.6bn and domestic institutions sold equities of Rs3.7bn. Asian markets are trading mixed today, with the Nikkei up and the Hang Seng down. SGX Nifty is trading with a moderate decline.
Indian stock market and companies daily report (March 11, 2010, Thursday)
The benchmark indices posted small gains as European markets reversed early losses and US index futures rose. The market breadth was weak after a strong start. Auto stocks edged higher on fresh buying. Banking shares were mixed. Telecom pivotals saw a divergent trend, but IT stocks declined on profit taking following recent gains triggered by upbeat US jobs data. The Sensex and the Nifty closed in the green, with gains of 0.3% each. The BSE Mid-cap and Smallcap indices underperformed the benchmark indices and closed with losses of 0.1% and 0.2%, respectively. Among the front-liners, Hero Honda, ACC, RIL, JP Associates and HDFC were up by 1-3%, while NTPC, Maruti Suzuki, Bharti Airtel, Infosys and Sun Pharma were down by 1%. In the Mid-Cap segment, M&M Financial Services, Asian Star, Amtek Auto, BF Utilities and Indusind Bank were up by 5-8%, while Balrampur Chini, Triveni Engineering, Bajaj Hindusthan, Shree Renuka Sugars and Nagarjuna Fertilizers were down by 4-8%.
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