Share Bazaar News India

Motilal Oswal Financial Services has declared its numbers for the quarter ended March 2008. The company's income stood at Rs 186.6 crore versus Rs 108.1 crore on QoQ basis.

During the same quarter its net profit was at Rs 44.2 crore versus Rs 18.7 crore on QoQ basis and Rs 53.7 crore on YoY basis. OPM were at 38% versus 35%.

Motilal Oswal of MOST expects the next year's turnover to be better than this year. He said 60% of retail revenues come from franchisees and the brokerage business contributes to about 80% to overall revenues. He further informed that the i-Banking business was up 140% and contributed to about 10% to total revenues.

Excerpts from CNBC-TV18's exclusive interview with Motilal Oswal:

Q: First if you can clarify, there is a large booking of revenues and profits you have done on the Great Offshore deal which you closed and how much that would have specifically contributed?

A: I would not like to comment on that but whatever deals we have completed in last year, in all sense those avenues are booked. And I don’t see any kind of extraordinary trends in terms of booking profits, or any cost on QoQ basis as far as last year is concerned.

Q: It's been a difficult quarter for most of the broking industry - how are you negotiating that? Are your fixed cost beginning to bite, or have you taken any conscious measures as a management to try and trim some of the fixed costs?

A: If you see on QoQ basis, definitely the last quarter was very challenging. But I would say that the kind of business we are in, especially the brokerage business, which contributes majorly to our revenue, I think it is better if we look at YoY kind of growth. I’ll try to do some analysis for the last 10 years in terms of market turnover - in last 10 years, only one year in terms of the market turnover was down compared to the previous year. But we are seeing that trend on YoY basis. The market turnover is going up, and on that basis, definitely I would assume that even for next year, the turnover is definitely going to be better than what we have seen this year.

Coming back, I think the cost in terms of fixed and variable cost, you would know that it is definitely different from business to business, like in broking business which is very important and the bigger cost is the infrastructure cost and the second is people cost. I think in our case when we look at the broking revenue, people cost would be about 60% fix and 40% would be variable and that takes care to the larger extent in terms of volatility in the earnings.

Second thing which is very important and typical in our case is that about 60% of our retail revenue comes from the franchises network, where the cost are absolutely variable in terms of sharing, so we really need to look from that perspective.

Q: Can you just break up the performance on the bottomline between Investment-Banking (I-Banking) and Co-broking, and how much you see I-Banking contributing over the next 2 quarters?

A: I think if we look at last year, the I-banking was about 7% revenue and this year it will be about 10% revenue to the total revenue in terms of growth on YoY basis, while the broking revenues have grown by about 75% but investment banking revenue have gone up by about 140%.

Q: I believe you also have some outstanding dues this quarter from customers, what is that to the tune of and how much do you hope to recover?

A: Whatever you see on YoY basis, I think the debt is normal and last quarter because of the volatility provided for about 3.8 crore as debts.

Q: Do you see any hits coming in at all because of the turbulent phase that you went through in terms, of firstly the recoverable money or any kind of propriety account exposures that you may have had?

A: That’s what I said - on customers account we have provided for Rs 3.8 crore and we don’t see any kind of more significant money, which has to be provided for. So I think what is to be provided for, we have provided for and as far as the propriety trading is concerned, we don’t have any kind of propriety trading in our books.

Source: Moneycontrol.com