Focus remains on buying quality; all operating businesses in good shape, says MOFS’ Raamdeo Agrawal

Motilal Oswal Financial Services (MOFS) posted a healthy bottomline in Q3 driven largely by a turnaround in the housing finance business, which seems to be stabilising.

Discussing the quarterly numbers and the business outlook, Raamdeo Agrawal, chairman, MOFS said, “The problem part in the housing finance sector, which we saw two years back is over. The real highlight in this year’s results is change in the outlook for housing finance business."

Of all the operating businesses, housing finance business looks to be now falling in place. However, to say that it will grow rapidly would be too much of a statement but now there is no problem as such, he added.

On economy front there seems to be some mixed signals, while there are some bad patches, there is some stabilisation too visible,” said Agrawal in an interview with CNBC-TV18.

When asked about business outlook for all their businesses, he said broking business has seen lot of traction. For the asset management business, right now their AUM was at an all time high and the business was well poised to manage more money in  better way. Housing finance was also doing great. "So, all the operating businesses are in good shape or are looking very good. Balancesheet is in very healthy shape because there is no more call on free cashflow, free cashflow is fully being invested into my own products. So we have about Rs 2,200 crore out of Rs 3,500 crore in our own products,” he added.

With regards to investing, he said, “If you are a long-term investor, it doesn’t matter even if there is 20-25 percent correction. It will only give you opportunity to buy more.”

When asked if he was buying into midcaps like Rakesh Jhunjhunwala, Ramesh Damani, and Radhakishan Damani, he said, “I manage different kind of money, they have private money, so they can move very quickly."

"I do not change my portfolio strategy just by looking at a certain fact because the cost of changing even 5 percent of the portfolio is very high for us, and we do not sit on cash. So, we cannot be that opportunistic like them and say that since the trend is changing, let me put 5 percent into a midcaps etc but yes, we are also watching that midcaps and see that they are moving and the opportunity is emerging over there," he said, adding that they were not as  hesitant as earlier to put in incremental money into midcaps.

When asked about his investing strategy, he said for investing one needs to understand what fits into their style of investing. For them, they focus on quality-growth-longevity & favorable price (QGLP) style of investing -if there is no quality they do not buy. "I am very finicky with the quality because with the bad quality, I have suffered a lot and with public money, you suffer double – you suffer money and you suffer reputation, while in private money you only suffer money,” Agrawal said, adding that he also looks at investing with the view that if they do not want to hold something for ten years, then they would not want to hold it for ten months either.

Talking about his expectations from budget 2020, he said, “They have to kick-start the economy. We have to restart the economic engine. This trust deficit or the weakness or whatever people are feeling, they must handle it upfront. Prime Minister (PM), Finance Minister (FM), everybody must give that leadership speech. I am looking for any tax concession, in fact we be will make about Rs 90 crore this year because of tax breaks. The investment in the economy has to pick up because public spending itself will kick start private demand. We need some out of the box thinking.”