Motilal Oswal share price jumps over 4% as Emkay Global initiates coverage with a ‘Buy’ call, sees 26% upside

Motilal Oswal Financial Services share price rallied over 4% on Thursday after Emkay Global initiated coverage on the stock as it believes the company is the ideal mode for riding the financial wealth creation journey in India over the coming decades. Motilal Oswal shares gained as much as 4.72% to ₹1,655.00 apiece on the BSE.

Emkay Global initiated coverage on Motilal Oswal Financial Services (MOFSL) with a ‘Buy’ rating and a March 2025 target price of ₹2,000 per share, implying an upside of 26.5% from Wednesday’s closing price.

MOFSL’s businesses are centered on the three broad areas of Capital Markets, Asset & Wealth Management, and Housing Finance. And 70% of its consolidated net worth is in the form of treasury investments (Equity, MF, and alternates), which Emkay Global believes provides an added safety margin to valuations of core operating businesses. 

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“While volatility is part & parcel of any equity-linked story, MOFSL has built its business model around the economic moats of brand, reach and people, and has diversified its offerings well to capture a large part of customers’ wallet in their wealth creation journey,” Emkay Global Financial Services said in a report.

Moreover, the diversification of its businesses has led to considerably reduced volatility in revenue. A wide array of offerings coupled with brand and reach across the country allow MOFSL to capture a larger wallet share of India’s mass-affluent ultra-high-net-worth individuals (UHNI) population in imminent decades, as per Emkay Global.

MOFSL has clocked net-worth CAGR of 17%, 22%, and 22% in FY08, FY14, and FY19, respectively, even after paying around 30% of operating net profit in dividends and buybacks, and without any capital raise post its IPO in FY08.

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Emkay believes this stands as the real testament to its economic moat, as this impressive growth in the medium term has come during a period of extreme events, such as the GFC in 2008, the Indian Capital Market volume drought in 2011-13, pandemic Covid-19, and Fintech-led discount broking disruptions.

It estimates that MOFSL would log core net profit (excluding returns on Treasury Investments) CAGR of 24% in FY23-26 to ₹1,670 crore.

The key risks highlighted by Emkay Global are economic or regulatory shocks driving persistent de-rating of Indian equities and large churn in key management personnel.

Motilal Oswal share price has spiked more than 30% in 2024 so far and the stock has risen over 182% in the past one year.

At 2:30 pm, Motilal Oswal shares were trading 2.41% higher at ₹1,618.40 apiece on the BSE.

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