Buy Motilal Oswal Financial Services; target of Rs 900: Emkay Global Financial

Emkay Global Financial's research report on Motilal Oswal Financial Services

MOFS reported a steady performance during Q3FY25 amid volatile markets, with Operating PAT at Rs5.25bn (+39% YoY, -3% QoQ); however, a treasury loss of Rs0.7bn resulted in consolidated PAT (including OCI) at Rs4.56bn (-41% YoY, -63% QoQ). Given the regulatory changes and impact of the volatile equity markets, the Wealth Management segment saw a sequential decline in PAT whereas the Asset & Private Wealth Management business saw 10% QoQ PAT growth driven by AUM growth. Healthy disbursements and AUM growth resulted in strong PAT growth in the Housing Finance business. The management continues to invest in RM addition across the Wealth Management and Private Wealth Management businesses, for driving growth, whereas the Asset Management business will see expansion in distribution with an increased sales-force and continued launch of products. Given the volatile market conditions, we expect the businesses to be impacted.

Outlook

We cut FY26-27E PAT by 8-9% and reiterate BUY on MOFS, while revising down our TP to Rs900 (a ~14% cut), given favorable valuations and its well-established franchise track record of thriving through market volatilities and cycles.