3RD

RD MOTILAL OSWAL

Think Equity Think QGLP Contest 2019

Application Form

For more details & clarifications, email thinkQGLP@motilaloswal.com

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Terms & Conditions
By filling up this Application Form, you agree to abide by the following terms & conditions:
• Participation in the “3rd Motilal Oswal Think Equity, Think QGLP Contest 2019” is open to students
currently pursuing MBA or equivalent degree at any Indian business school.
• Only one entry (3-member team) per business school will be accepted.
• If there are entries from more than one team, the business school will need to internally screen the
entries and select the best team to participate in the contest. Motilal Oswal AMC will not be responsible
for the internal screening process followed by the respective business schools.
• All applications will need to be submitted strictly in the format annexed here in subsequent slides.
• The last date for submission of entries is Monday, 2nd September 2019. Submit your Application Form
and financial model in Excel at www.motilaloswalmf.com/QGLPcontest/2019 (20th August onwards).
• All the entries received will be assessed by an internal team of Motilal Oswal led by Mr Raamdeo Agrawal,
Chairman, Motilal Oswal AMC. The 10 best entries will qualify for the contest finals to be held on
Wednesday, 2nd October 2019, at IIM Ahmedabad’s ‘The Red Brick Summit’.
• Team members of the qualifying 10 entries will be provided accommodation in Ahmedabad for the night
of 1st October 2019. All other costs including airfare, conveyance and sundries will need to be borne by the
team members or participant schools.
• The qualifying teams will need to present their stock pitch to a three-member jury, chaired by
Mr Raamdeo Agrawal. Based on the presentation, the jury will finally select the top three winning teams.
• The prizes are: Winning team – INR 500,000/-, First runner-up – INR 300,000/-, Second runner-up –
INR 150,000/-, and 7 other teams INR 50,000/- each. All finalists will receive a Certificate of Appreciation.
• All material submitted by participants as part of this contest may be used by the Motilal Oswal Group in
the manner it deems fit.
• In all matters related to the contest, the decision of Motilal Oswal Group will be final and binding on
all participants. 2
Terms & Conditions

IMPORTANT: Details related to the stock pitch submitted –

• The stock should be listed on the BSE and/or NSE, with a minimum market
capitalization of INR 3,000 crores as on the date of application.
• The pitched stock should ideally offer return CAGR of 20% or higher over the
next 3 years.
• The final submission should include —
1. This Application Form duly completed; and
2. An Excel file carrying the financial model with –
(a) Past earnings, balance sheet and key ratios for at least 5 years
(b) Projected earnings, balance sheet and key ratios for at least 3 years.
• Judges will look for sync between the ‘narrative’ (investment argument) and
‘numbers’ (financials).
• For more details and clarification, email thinkQGLP@motilaloswal.com.

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Jury members – Brief profile
Mr Raamdeo Agrawal
Mr Raamdeo Agrawal is the co-founder and Joint Managing Director of Motilal Oswal
Financial Services Ltd and Chairman of Motilal Oswal Asset Management Company
(MOAMC). A Chartered Accountant, he is a pioneer of equity research in India and has
been authoring the Annual Motilal Oswal Wealth Creation Study for the last 23 years.
Under his Chairmanship, MOAMC’s assets under management have grown rapidly to
the current level of over INR 35,000 crores.

Mr R Srinivasan
Mr R Srinivasan joined SBI Funds Management as a Senior Fund Manager in May 2009;
he is now the Head of Equity and also directly manages a number of funds.
He has 27 years experience in equities having worked with Future Capital Holdings,
Principal PNB Asset Management, Oppenheimer & Co (later Blackstone), Indosuez WI
Carr and Motilal Oswal, among others. Mr Srinivasan is a post graduate in Commerce
and has an MFM degree from the University of Mumbai.

Mr Pankaj Tibrewal
Mr Pankaj Tibrewal is Senior Vice-President and Fund Manager with Kotak Mahindra
Asset Management Company. He manages schemes such as Kotak Emerging Equity
Fund, Kotak Small Cap Fund and Kotak Equity Hybrid Fund. He has been featured by
Outlook Business as one of the top 10 fund managers in India for four consecutive
years from 2016 to 2019. He is a commerce graduate from St Xavier's College, Kolkata,
and also holds a Master’s degree in Finance from Manchester University. 4
Institute & Screening Authority Details

Name of Institute :- National Institute of Industrial Engineering, Mumbai

Address of Institute :- Vihar Lake marg, Near Ramada Hotel, Powai-400087, Mumbai.

Screening Authority Details

Name _____________________________________________
Designation _____________________________________________

Phone _____________________________________________
Email _____________________________________________

Declaration
I hereby confirm that I have screened this Application Form and shortlisted it as the final entry
from our Institute to the “3rd Motilal Oswal Think Equity Think QGLP 2019” contest.

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Team Details

Name of Institute National Institute of Industrial Engineering, Mumbai

Team Member #1
Name : Sagar Tachtode
Mobile : 7978798177
Email : Sagar.Tachotode.2020@nitie.ac.in
Team Member #2
Name : Souvik Bardhan
Mobile : 9007873330
Email : Souvik.bardhan.2020@nitie.ac.in

Team Member #3
Name : Kshitiz Singh
Mobile : 9653009970
Email : Kshitiz.Singh.2020@nitie.ac.in
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Muthoot Finance Limited

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 Brief company background
1. Muthoot Finance is India’s one of oldest and fastest growing financial corporation.
2. It is known as the largest gold financing company in the world.
3. Muthoot Finance is operating over 131 years and is the most trusted gold loan company with
over 2 lakh customers.
4. Muthoot Finance subsidiaries with different verticals are as given below:-
i. BELSTAR INVESTMENT AND FINANCE PRIVATE LIMITED
ii. MUTHOOT INSURANCE BROKERS PRIVATE LIMITED
iii. MUTHOOT HOME FIN (INDIA) LIMITED
iv. ASIA ASSET FINANCE PLC
v. MUTHOOT MONEY LIMITED
vi. MUTHOOT TRUSTEE PRIVATE LIMITED
vii.MUTHOOT ASSET MANAGEMENT PRIVATE LIMITED

5. As of March 2019, MFL’s Gold loan assets were over INR 34,246.1 Crore (18% Y-O-Y)
6. Revenue over INR 6,880.6 Crore (9% Y-O-Y)
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7. EPS over 49.27 INR/Share (11% Y-O-Y)
QGLP Analysis

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 QGLP in a nutshell
“QGLP – Quality, Growth, Longevity, reasonable Price”
Quality of business x Quality of management
• Highest market share in Gold Loan
• Rural demand is likely be boosted by increasing farmers income
• Ensures 100% safety and Security of Gold Jewellery with
advanced Gold Vault
• AI based Bots for Hassle-free, paper-less transaction
• New business models: account
aggregators’ and ‘peer to peer lending
platforms (“P2P Lending”)
• Proactive Risk Management QGLP
Price
• Attractive valuation – TTM P/E 12.1x, P/B 2.5x
• Expected high EPS CAGR of 28% over FY19-22
• Good promoter holding with 73.49% stake.
• 5-year stock return with CAGR 30%, upcoming 3
years return will be 35% considering the expansion
plans
Growth in earnings
• Continuous growth in God assets and Revenues.
• Planning to acquire new customers in regions
other than south
• Rapidly expanding middle class population
• Expect FY19-22 Gold Assets CAGR of 22%
• Net Profit CAGR near to 28%
Longevity – of both Q & G
• Expansion plans for subsidiaries
• Leveraging the Cash starvation in India for
exponential growth of the company
• High focus on overall Risk Management and
Gold Asset Quality
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 Q – Quality
Quality of Business
• Gold has been a liquid asset and a universally accepted commodity with a continuous value
appreciation over decades
• India’s gold loan market has started attracting large investors in the past decade
• The organized Indian gold loan industry is dominated by gold loan NBFCs
• Though banks offer gold loans at relatively low interest rates, factors such as exclusive focus on gold
loans, lower turnaround time, flexible schemes, wider branch network and relatively long working
hours place NBFCs at an advantageous position to attract customers
• Robust advanced technology based Risk Management System (E.g. MATTU and MITTU are AI based
bots introduced first in the Indian Gold Loan Industry providing 24/7 Service]
• India’s organized gold loan market is likely to grow to 3,101 billion by 2020, at a three-year CAGR of
13.7%. (Source: KPMG, Business Standard)
• NBFCs: Porter’s Five Forces –Moderately favorable competitive landscape

Force Comment Sector Score (0 to 1)

1. Inter-firm rivalry Medium 0.5
2. Bargaining power of customers Low 1
3. Bargaining power of suppliers Low 1
4. Threat of new entrants Medium 0.5
5. Threat of substitutes Low 1.0
Total Score 4.0
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 Q – Quality

 Quality of Management
• Flawless track record of corporate governance
• Consistent dividend payout of at least 2%
• Creating culture of high-performance and excellence.
• Focused on trending technologies like AI. They have used this for making Muthoot
Advanced Technology Transformation Unit (MATTU), Muthoot Intelligent Technology
Transformation Utility (MITTU)] bots to provide hassle free service 24X7.
• Skills and expertise are fundamental to our growth
• Muthoot Information Network for Employees (MINE) System :-produces rich analytics
for the management team.
• Board and professional teams are having rich experience in Gold loan financing.
• Company’s Philosophy of Corporate Governance is aimed at value creation, keeping
interest of all stakeholders protected in most inclusive way.
• Growth Mindset:- Expanding the presence in east west and North Region where
unorganized lenders are prominent.
• Planning to double the business from subsidiaries.
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 G – Growth in Earnings

• For 2018, Gold demand reached 4345.1 Tonnes, up from 4159.9 Tonnes (4.45%)
(Source:- Goldhub)
• Investment in bars and coins up by 4% to 1090.2 Tonnes Rapidly Rapidly expanding
middle class population
• Rural demand is likely be boosted by increasing farmers’ income
• The Gold Monetization Scheme reduced the country’s reliance on gold imports to
meet domestic demand and aid Indian households to monetize their precious metal
• Proposed policy to increase gold supply from local refineries to 80% in the next few
years from 40%
• India’s organized gold loan market is likely to grow to INR. 3,101 billion by 2020, at a
three-year CAGR of 13.7%. (Source: KPMG, Business Standard)
• Our gross loan portfolio increased to INR. 342,461 Million during the year under
review, an increase of 18% from INR. 291,420 Million in FY 2017-18.

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 G-Growth

• Revenues grew by 9% from INR. 63,331 Mn. in FY 2017-18 to INR. 68,806 Mn. in
FY 2018-19.
• The capital adequacy ratio stood at 26.05 % in FY 2018-19 with a Tier I capital of
25.61 %, on account of ploughing back of profit for the year, net of dividend
payment.
• Profit after tax increased by 11% and stood at INR.19,721 Million in FY 2018-19
from INR 17,776 Million in FY 2017-18.
• Earnings per share (EPS) increased to INR. 49.27 in FY 2018-19 from INR. 44.48 in
FY 2017-18.
• Expecting growth in PAT of 30% CAGR over FY19-22
• Expecting Growth in EPS by 22% over FY19-22

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L – Longevity

• Longevity of Quality:-
• High focus on the subsidiaries, which are only contributing 5% to the whole revenue.
• Focused on expanding Gold loan business PAN India.

• Longevity of Growth:-
• Professional are well versed with all the risks involved with proper mitigation plan.
• India’s Top managed NBFC which has a long growth opportunity in the capital starved
economy like India.

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P – Price

Valuation Attractive with great P/E and P/B

• Current P/E 12.1x and P/B 2.5x
• Expecting high EPS CAGR of 22% over FY19-22
• For Past 5-year from FY15-19 stock performed with CAGR of 30%
• Considering expansion plans in vertical and subsidiaries we can expect
stock to grow with CAGR of 35% . BUY…BUY…BUY.

INR Crores FY18 FY21 E CAGR

Gold Loan Portfolio 33853 37238.3 10%
PAT Crore) 1720.27 3181.17 30%
EPS (INR) 43 79.39 30%
Stock Price (INR) 375 1002.49 30%
15,024.75 30%
Market Cap 40,165.76

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 P - Price

Expecting Muthoot Finance Ltd stock outperformance to

continue :-
Muthoot Finance Limited VS Nifty 50- Rebased

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 Financial Summary

• Loan assets portfolio crossed INR 342.00 Billions

• Listed debentures portfolio raised through the public issue of INR.37.09 Billions
• Net owned funds crossed INR. 97.69 Billions
• Gross annual income touched INR. 68.81 Billions
• Profit after tax for the year touched INR 19.72 Billions
• Branch network crossed 4,400+
• Increased stake in M/s. Belstar Investment and Finance Private Limited (BIFPL) to
70.01% and M/s. Asia Asset Finance PLC to 69.17%
• Acquired Muthoot Money Limited (MML) as a wholly-owned subsidiary
entering into vehicle and equipment finance business
• CRISIL upgraded the Company’s long-term bank loan ratings by one notch from
AA-/(stable) to AA/(Stable)

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 Financial Summary :-

PAT and Share Price

PAT (Crores)

4500 1400
0%
4000 GR3
C A 1200
3500
1000
3000

Share Price
24% 800
CAGR
2500
2000 600
1500
400
1000
500
200

0 0
FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22

Year

PAT Share Price

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Risks & Concerns :-

• Dynamic industry landscape:

The industry we operate in is growing rapidly with constantly changing
trends and customer preferences.
Inability to keep abreast with these changes can lead to loss of market
share.
• Changing demographics:
The future millennial generation have higher disposable incomes and a
higher propensity to spend. While this bodes well for us in the short run,
we may experience a reduction in our margins over the long run as young
people are less brand loyal and more open to experimentation

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Conclusions & Investment View

From Technical analysis :-

• Currently ranging between INR.575 to INR.675
• Stock is in uptrend
• Buy near INR. 580
• Stop Loss INR. 545
• Target is Open for highs
• Breakout above INR 660

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