Motilal Oswal Financial Services Ltd. share price target

Motilal Oswal Financial Services (MOSL) has been benefitting from the tailwinds in the capital markets space, evident from EBITDA ex-treasury income rising from INR 2.6bn in Q1FY23 to INR 3.4bn in Q1FY24 and INR 4.8bn in Q1FY25.

Quarterly Update Q1FY25

MOFS reported a robust operational and financial performance in Q4FY24,
leading to a strong finish to the fiscal. While performance of the Capital Markets
segment was sturdy, the Asset and Wealth Management segment delivered a
solid turnaround with the Housing Finance business gradually coming back on
track.

Quarterly Update Q4FY24

The MOFS stock has materially outperformed in the last one year, and
maintained its strong run, with the share price up 12.5% in the last 1 week and
up 30% since our coverage initiation last month (Refer to our note, Perfect
vehicle to ride India’s wealth creation journey). The recent strong show by
MOFS shares was largely endorsed by the value discovery across its business
segments of Capital Markets, Asset Management, Wealth Management, and
Affordable Housing Finance in the backdrop of the current re-rating seen in
listed peers in these specific segments.

Quarterly Update Q3FY24

Quarterly Update Q2FY24

Quarterly Update Q1FY24

Motilal Oswal’s (MOFSL) business performance improved in FY23 as seen from: (1) steady market share in derivatives, (2) improved mutual fund (MF) performance in select schemes, and (3) consistent growth with stable asset quality in the housing finance business, which also has a new MD now.

Quarterly Update Q4FY23

Motilal Oswal’s (MOFSL) valuations have become attractive considering its trading at 5x FY24E core P/E multiple which excludes investment income and the investment book as well as high implied holding company discount of 45% basis current market capitalization and our assigned SOTP valuation multiples.

Motilal Oswal Financial Services (MOFSL) has specific levers for growth in each of its segments. We appreciate the potential upside as the company works towards each of these metrics (improvement in broking volume share, improvement in AMC performance,

Quarterly Update Q3FY23

Motilal Oswal (MOFSL) is well diversified in its business offerings which include flow-based broking (45%), stock-based asset/wealth management (WM)/distribution (22%), lending related to capital markets (11%), affordable housing (14%) and private equity/real estate segment (PE/RE) (4%) (all percentages of consolidated core operating revenue excl. interest on bank deposits).

Initiating Coverage Report

Motilal Oswal (MOSL) reported a mixed Q1FY21 performance wherein broking revenue was healthy but asset & wealth management saw pressure. The topline stayed flat at | 633 crore (excluding MTM impact) while earnings increased 29% YoY to | 167 crore, led by MTM gains on investments....

For the AMC business, we are concerned about fund raising, and regulatory clampdown. We remain wary of increased competition in broking. Lastly, despite much of the negatives in MOHL being factored in, the business needs to display scalability. We maintain a SELL with a TP of 711 i.e. 10/20x Broking/AMC business Dec-21E EPS. Key Risks: any sharp turnaround in fund raising and broking market activity, stronger scale up and lower stress in legacy book at MOHL. Treasury income (Rs 545mn, +82.3% beat), boosted MOFS (ex-MOHL) reported 3QFY20 PAT to Rs 1.49bn (+11.0/-3.1% YoY/QoQ). However 9MFY20 core cap markets/AMC performance remains weak as PBT declined 9.9/9.0% YoY. We tweak our estimates but retain SELL (unchanged TP of Rs 711), as core profit growth remains elusive.