MOTILAL OSWAL FINANCIAL SERVICES LTD. NCD IPO – April 2024, should you invest?

High Yield | AA/Stable Rated | Minimum Investment: 10k Only

 

Motilal Oswal Financial Services Limited is issuing the Non-Convertible Debentures. These NCDs are AA/Stable rated by CRISIL. The NCDs are being issued in eight series: coupon ranges from 8.85% to 9.7% p.a. and different tenures of 24 months, 36 months, 60 months and 120 months . The NCDs are secured and redeemable in nature.

Motilal Oswal Financial Services Limited NCD IPO: Coupon rates and effective yield for each of the series 

Allocation Ratio

The allocation ratio is prepared based on norms laid down by SEBI. Before announcing the allocation ratio, the same has to be approved by SEBI.  Once the IPO subscription closes, applications will be divided into different categories. The category-wise allocation ratio is always decided and declared during the launch of the particular IPO. Considering the Allocation Ratio, units will be assigned to applicants. Refer to the chart to know the application ratio for Motilal Oswal Financial Services Limited NCD-IPO. 

Investment Process for Motilal Oswal Financial Services Limited NCD IPO

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If the investment amount is  less than & up to 10 lakhs, retail investors can apply for an IPO online.

If the investment amount is more than 10 Lakhs. 

Financial Overview

Snapshot stating the Revenue, Expenses, Net Worth and PAT (In crores)

Cash flow for last few years (In crores)

Cash flow refers to the movement of cash in and out of the business at a specific point in time. It represents the net balance of the cash movement.

• • *Cash flow from operating activities reflects the amount a company generates through its product of services.
  • **Cash flow from investing activities reflects cash generated and spent relating to investing activities, like purchase of assets, sales of securities etc.
  • ***Cash flow from financing activities gives an insight into the financial stability of a company to its investors. It reflects the net flows of cash that are used to fund the company.

Ratio Analysis

Issue analysis

Pros 

• These are secured securities.
• The issuer is offering high coupon rates, when compared with FD rates.

Cons

• Unfavorable regulatory measures affecting the group’s business segments have led to a considerable decline in the group’s business risk profile.
• Persistent deterioration in asset quality has substantially affected the group’s profitability.

To get better returns than Bank FDs, invest in NCD-IPOs online. 

About Motilal Oswal Financial Services Limited

Established in 2005, MOFSL functions as the parent company of the Motilal Oswal Group, a leading provider of capital market services in India. The company, along with its subsidiaries, offers broking and distribution services, asset and wealth management, portfolio management, private equity, and housing finance.

Strengths

• MOFSL has a strong foothold in equity broking, boasting a track record spanning over three decades and a nationwide presence across 2,500+ locations. It operates through 9,300+ franchises and serves an active client base of 8.2 lakh on the National Stock Exchange (NSE) as of December 31, 2023.
• In 9M FY2024, the Group achieved its highest-ever performance, recording a net profit of Rs. 1,721 crore, with a return on equity of 31.5%, surpassing the average net profit of Rs. 789 crore during FY2019-23.
• The company maintains a comfortable capitalization profile, supported by robust internal capital generation despite dividend payouts and buybacks. As of December 31, 2023, it reported a net worth (including minority interest) of Rs. 8,310 crore and a gearing of 1.5 times.

Weakness

• MOFSL is exposed to market volatility, though its presence in businesses with relatively stable income streams helps stabilize earnings.
• The company has limited experience in the lending business. However, there is gradual improvement in the performance of new originations, providing some comfort.

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Source- Prospectus April 9, 2024

Disclaimer – The information is published as on date 04/23/2024 based on information available on Prospectus April 9, 2024. The information may be subject to change in case of change in terms of prospectus or any other reason as the case maybe. Contents which are exclusively for educational information/knowledge sharing on capital market concepts and has no influence the investment/sale decisions of any investors