Motilal Oswal Financial Services Ltd. stands as a stalwart in the Indian finance industry, renowned for its pioneering contributions and unwavering commitment to excellence. With over 3 decades of expertise, the company has evolved into a powerhouse, offering a diverse range of financial services. As of the latest available data, Motilal Oswal Financial Services Ltd. boasts of a revenue of Rs.4,177 Crores [Mar 2023]. The company’s dedication to research, client-centric approach, and strategic vision have solidified its position as a leading name, synonymous with trust and innovation in the dynamic world of finance. Here is the Inspiring story of Motilal Oswal: how it achieved the pinnacles of the world of finance:
Mr. Motilal Oswal’s Background:
Who is Mr. Motilal Oswal?
Motilal Oswal is an Indian businessman who played a pivotal role in the founding of Motilal Oswal Financial Services Ltd. (MOFSL). Alongside his co-founder, Raamdeo Agrawal, Motilal Oswal established the company in 1987. As the chairman and managing director of MOFSL, Motilal Oswal has been instrumental in shaping the company’s vision and strategy.
Motilal Oswal’s background and early life:
Motilal Oswal’s early life and background significantly influenced his trajectory into the financial sector. Born into a Jain family in the small village of Padru in Barmer, Rajasthan, Motilal Oswal’s father was a prosperous grain trader. Despite the family’s business background, Motilal Oswal opted for formal education. After studying at the SPU Jain College in Falna, he moved to Mumbai to pursue a career in chartered accountancy. It was during his stay at a Mumbai hostel that he crossed paths with Mr. Raamdeo Agrawal, his future business partner. Their shared vision and complementary skills laid the foundation for the establishment of MOFSL in 1987.
Founding Years and Vision:
How did Motilal Oswal Financial Services Ltd. (MOFSL) begin its journey?
In 1987, MOFSL embarked on its journey as a small sub-broking unit founded by Mr. Motilal Oswal and Mr. Raamdeo Agrawal. The company’s inception marked a departure from traditional broking businesses, as Motilal Oswal and Raamdeo Agrawal aimed to introduce professionalism and research-driven practices into the industry. The founding principles emphasized a customer-first attitude, ethical conduct, and a commitment to transparent business practices.
Initial challenges faced by Motilal Oswal and Raamdeo Agrawal:
The early years presented challenges, particularly in establishing themselves as professionals in a market where traditional broking businesses dominated. The competitive broking landscape posed hurdles that Motilal Oswal and Raamdeo Agrawal had to overcome. Their innovative approach as chartered accountants entering the broking sector was revolutionary in 1987, challenging the conventional norms of the industry.
They decided to join BSE as sub-brokers but the exchange was largely dominated by Gujarati traders during those times. Their breakthrough came when they encountered a broker on the trading floor who facilitated their sub-broker position at the BSE. It was during this time that they received a badge bearing the name “Motilal Oswal,” a moniker that would later become the identity of the company.
In an interview with Forbes India in 2017, they shared that until 1991 they had made very little money. However, the Harshad Mehta bull run proved to be a turning point. During that period, they generated a profit of Rs. 30 crores within 20 months, starting with an initial investment of Rs. 15 Lakhs. This success was largely attributed to being in the right place at the right time. Without the bullish market conditions spurred by the Harshad Mehta phenomenon, they might have considered parting ways and pursuing conventional jobs, as the financial prospects at that point were not substantial enough.
Mission statement of MOFSL in its Early Years:
During its nascent years, MOFSL’s mission was clear—to help people make money in the stock markets. This mission underscored the company’s dedication to wealth creation for its clients, setting the foundation for a client-centric and research-driven approach.
Commitment to Research:
How has research been a cornerstone of MOFSL’s approach?
Research has been a fundamental pillar of MOFSL’s approach, distinguishing the company in the financial services landscape. The commitment to rigorous research has been integral to the company’s ethos, guiding investment decisions and client advice. By emphasizing a research-driven strategy, MOFSL has aimed to provide clients with informed and data-backed insights, contributing to their success with Institutional broking in the financial markets.
Percentage of revenue invested in equity research:
As per data shared in the 2017 Forbes India Interview, approximately 10% of MOFSL’s revenue is dedicated to equity research, underlining the significant financial commitment to maintaining a robust research infrastructure. The company boasts a team of 25+ research analysts who diligently analyze over 250 companies across 20 sectors. This substantial investment in both financial resources and human capital underscores MOFSL’s dedication to staying at the forefront of market intelligence.
Diversification into Financial Services:
Key financial products and services offered by MOFSL Today:
Presently, MOFSL stands as a well-diversified financial services firm, providing an extensive array of financial products and services. These offerings cater to a diverse client base and include, but are not limited to, Private Wealth Management, Retail and Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, and Home Finance.
How has the company expanded its network and client base over the years?
MOFSL’s growth extends beyond its service offerings, encompassing a vast network that spans over 550 cities and towns. The company operates through 2500+ Business Locations operated by its Business Partners & the company, a testament to its widespread presence. Additionally, MOFSL’s clientele has grown significantly, serving over 55,00,000 customers including retail customers (including High Net worth Individuals), mutual funds, foreign institutional investors, financial institutions, and corporate clients, reflecting the trust and reach the company has achieved in the financial services sector.
Evolution of MOFSL:
Market Capitalization and Financial Performance over the years:
Over the years, MOFSL has experienced significant growth in both market capitalization and financial performance. As of recent data, MOFSL’s market capitalization has seen a remarkable increase, rising by 245% to reach Rs. 16,000 Crores. This surge reflects the market’s confidence in the company’s business strategies, service offerings, and overall financial health.
Key Milestones in the company’s growth trajectory:
MOFSL’s growth trajectory is punctuated by key milestones that highlight the company’s achievements. One notable milestone is the diversification from a broking house into a non-banking financial company, showcasing the company’s adaptability to evolving market dynamics. The entry into the asset management business in 2008 and the establishment of a housing finance company (HFC) in 2013 are additional milestones that underscore MOFSL’s commitment to expanding its service portfolio. These strategic moves have contributed to the company’s robust financial performance and solidified its position in the financial services industry.
The Prime and Stagnation of Broking Business:
Following the Y2K collapse, attributed to the calendar data bug disrupting the new millennium’s formatting and storage, the period from 2003 to 2007 marked their golden era. The broking business skyrocketed from Rs. 10 crore to Rs 1,000 crore, prompting their listing on the stock exchange in 2007. Unbeknownst to them, the advent of demat and computerization proved transformative, leading to a decline in brokerage rates from 1.5 percent to 5 basis points (0.05 percent). They realized that they wouldn’t be able to build a very big business.
Post 2008, they started pondering on what could they do with the Rs.1200 Crores that they had in access, leading to the starting of the Asset Management Business.
Building the AMC Business:
Challenges faced by MOFSL in the Asset Management Business:
When MOFSL entered the asset management business in 2008, it encountered a set of challenges inherent to this dynamic industry. The first 5 years were tough with limited growth to their AUM. In 2014, they introduced their active products in the mutual fund business, coinciding with a subsequent upswing in the markets. This propeled the growth of their AUM from Rs.1500 Crores in 2024 to Rs. 30,619 Crores [as of Jan 18th, 2024].
Housing Finance Venture – ASPIRE:
What prompted MOFSL to venture into housing finance with ASPIRE?
The decision to venture into housing finance with ASPIRE was prompted by a strategic assessment of market opportunities to invest Rs.500 crores in the access cash they had in their treasury. MOFSL recognized the growing demand for housing and the potential for value creation in the housing finance sector.
Hence, they made the decision to seed fund HFC. They informed the team of their commitment, they pledged Rs 100 crore for the endeavor. In the event of success, an additional Rs 400 crore would follow; however, if unsuccessful, they were prepared to absorb a Rs 100-crore loss.
Fortunately, HFC thrived, and the team received the promised Rs 400 crore additional investment from MOFSL.
Accolades and Awards MOFSL:
1. Mr. Motilal Oswal, MD & CEO, received the distinguished ‘Outstanding Institution Builder of the Year’ award at The AIMA Managing India Awards.
2. Motilal Oswal was honored with the GOLD award for marketing effectiveness at the Global ACEF Customer Engagement Awards.
3. Motilal Oswal Financial Services Ltd. was recognized with the esteemed ‘Brand of the Year’ title at the CNBC TV18 – India Business Leadership Awards.
4. MOFSL received the ‘Business Leadership Award’ for excellence in franchising and business development at the Franchise India Awards 2019.
5. MOAMC secured a notable position among ‘Asia’s Top 100 Money Managers’ for 2017, as acknowledged by the Institutional Investor magazine.
Motilal Oswal Financial Services Ltd. emerges as a beacon of success in the Indian financial landscape, crafting a legacy marked by innovation and resilience. Over three decades, the company transformed from a sub-broking unit into a diversified financial powerhouse, guided by visionary leaders Mr. Motilal Oswal and Mr. Raamdeo Agrawal. With a robust commitment to research, client-centric practices, and strategic expansion, MOFSL stands at the forefront of the industry. Recognized with prestigious awards, the company’s journey showcases a dynamic blend of entrepreneurial spirit, adaptability, and unwavering dedication, affirming its status as a trailblazer in India’s ever-evolving financial realm.
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