Motilal Oswal stock zooms 109% within 3 months; marketcap tops Rs 62,000 cr

At 02:38 pm; with a marketcap of Rs 62,392 crore MOFSL was quoting 12% higher backed by a combined volume of 14.14 million equity shares on the NSE and BSE.

Shares of Motilal Oswal Financial Services (MOFSL) hit a new high of Rs 1,063.40, soaring 14 per cent on the BSE in Friday’s intra-day trade amid heavy volumes on expectations of healthy earnings. The market price of this stock broking & allied services company has doubled or zoomed 109 per cent in less than three months from a level of Rs 508.65 on July 23, 2024. Thus far in the calendar year 2024, it has skyrocketed 238 per cent, as against 12.5 per cent rise in the BSE Sensex.

A sharp rally in the stock price of the company has seen market capitalisation (market-cap) of MOFSL cross Rs 62,000 crore for first-ever time.

 

At 02:38 pm; with Rs 62,392 crore market cap MOFSL was quoting 12 per cent higher at Rs 1,039.50 on the BSE. In comparison, the benchmark index was up 0.36 per cent at 81,298. The average trading volumes at the counter jumped four-fold, with a combined 14.14 million equity shares changing hands on the NSE and BSE.

MOFSL is a diversified financial services company with focus on managing client’s wealth. MOFSL operates in business segments like capital markets, assets & private wealth management and affordable housing finance. In each of the businesses, MOFSL offers a unique value proposition to its customers, creates its niche in each of the business segments and commands a premium position over peers. MOFSL carries its lending business by running a loan-against-shares book under Motilal Oswal Finvest Limited and retail mortgage-backed lending in the affordable housing segment under Motilal Oswal Home Finance Limited.

MOFSL has been benefitting from the tailwinds in the capital markets space, evident from earnings before interest, taxes, depreciation, and amortisation (EBITDA) ex-treasury income rising from Rs 260 crore in Q1FY23 to Rs 320 crore in Q1FY24 and Rs 480 crore in Q1FY25. This is well backed by better execution, demonstrated by the 320bps/ 250bps year-on-year (YoY) improvement in cash/ option market share, 36 per cent YoY increase in broking lending book, 37.2 per cent YoY increase in wealth management relationship manager count, 21bps/ 20bps increase in equity/SIP market share in asset management company (AMC) and 9.3 per cent increase in housing finance company (HFC) Loan book with 20bps improvement in RoA over the last two years (FY22-FY24).

With a total client base of around 7.3 million at end June 2024 quarter (Q1FY25), the Motilal Oswal Group caters to both retail and institutional clients through over 2,500 business locations, taking the pan-India pin code coverage to 98.0 per cent. As of June 2024, about 89 per cent of MOFSL Group customers had only a single product relationship, indicating potential cross-sale opportunity over the long term with expected financialisation of savings. The Securities and Exchange Board of India also defines MOFSL as a QSB (qualified stock brokers) in India, by virtue of their size and scale of operations, and its impact on investors and securities market.

As per management, investors today are more informed and seek more than just transactional services. Investors now demand personalised investment advice that considers their long-term financial goals.

This shift in investor and consumer behaviour signifies MOSL’s move towards deeper engagement in financial planning, which includes diverse asset classes and effective risk management. The transition to wealth management is not just a change in nomenclature, but a strategic evolution for the company, analysts at ICICI Securities had said in the Q1 result update.

Meanwhile, over FY20-FY24, MOFSL Group delivered 33 per cent compounded annual growth rate (CAGR) growth in operating profit (excluding treasury investments PAT), driven by the wealth management (39 per cent CAGR), capital markets (39 per cent CAGR), asset & private wealth (25 per cent CAGR) and housing finance (35 per cent CAGR) businesses.

With an increasing retail participation in the past three years across discount brokerages, there could be a gradual migration of clients towards full-service providers, benefitting the MOFSL Group due to evolving regulations for discount brokers.

Given volatility in the financial market business, such as private wealth, asset management and wealth management, its volume could see a certain moderation. However, the benefit of a widening of participation in the equity markets would stand to accrue on a recurring basis and operating leverage benefits of an established franchise would continue to play out for MOFSL, India Ratings and Research (Ind-Ra) said in its rationale update dated September 17, 2024.