Buoyant markets are likely to work favourably for these gamers which might be a part of the ecosystem.  Brokerages, asset and wealth administration firms and even non-public fairness/funding gamers are usually beneficiaries when markets are on a bull run.

Motilal Oswal Monetary Companies (MOFS) is one such well-entrenched agency that operates throughout the capital market ambit with a strong observe document.

The corporate is a full-service brokerage, and is into funding banking, institutional equities, mutual funds, various funding funds (AIFs) and portfolio administration companies (PMS), and even housing finance.

With₹3.8 trillion in property beneath recommendation as of March 2024, MOFS is a big participant within the business.

A diversified income combine with a number of rising divisions, regular improve in market share in companies and a wholesome treasury e book are positives for the corporate.

At ₹2,151, the inventory trades at a bit of over 13.3 occasions its per share earnings for FY24 and about 11 occasions its doubtless EPS for FY25. Even when we exclude treasury funding income from the general internet income of the corporate, the PE a number of for FY24 can be 16 occasions, and for FY25, it’s more likely to be 13 occasions. On a worth to e book foundation the multiples for 3.6 occasions FY24 numbers and a pair of.8 occasions the doubtless FY25 figures.

At these valuations, MOFS trades at lower than most wealth administration and mutual fund friends.

Being deeply linked to the market dynamics, monetary companies shares might be fairly risky throughout stiff corrections.

Subsequently, buyers with a medium to excessive threat urge for food should buy the inventory with at the very least a 2-3-year perspective.

Provided that the share worth has risen practically 268 per cent within the final one yr, buyers should buy the inventory in small heaps on declines linked to the broader market.

In FY24, the corporate’s revenues grew 33 per cent over FY23 to ₹5,075 crore, whereas internet income rose 162 per cent to ₹2,441 crore over the identical interval.

The corporate has typically been capable of ship greater than 50 per cent in revenue earlier than tax margin over the previous a number of quarters.

A number of drivers

The capital market division of Motilal Oswal Monetary Companies hosts many segments – brokerage, distribution, and funding banking. This division generates 60 per cent of the corporate’s revenues, with brokerage garnering a bit of over 39 per cent of the agency’s revenues in FY24.

It’s among the many prime 10 brokerages within the nation with an 8.2 per cent market share as of March 2024 (up from 5.1 per cent in March 2023) within the retail money section and eight.7 per cent share (up from 6.5 per cent in March 2023) within the futures and choices premium market. Amidst aggressive depth within the brokerage enterprise the place low cost brokers abound,MOFS has nonetheless managed to achieve market share, indicating a good diploma of buyer stickiness.

Its depository participant AUM grew at 48 per cent yearly from March 2020 to ₹2.26 trillion by March 2024. The common every day turnover rose at 122 per cent yearly from FY20 to ₹5.5 trillion by FY24.

Curiously, even the distribution section has risen sharply at 38 per cent yearly, from ₹9,034 crore in FY20 to ₹27,038 crore in FY24.

General, the revenues from the capital market division grew 37 per cent in FY24 over FY23.

From a macro business standpoint, from FY14 to FY24, the overall variety of money and F&O trades within the NSE have risen in each fiscal in comparison with the earlier yr, barring FY17. And demat account openings have skyrocketed within the final 5 years.

It’s clear that there’s a sure visibility in income for firms comparable to MOFS even when markets aren’t very conducive as commerce volumes proceed to pile up.

Different divisions thrive

The corporate’s asset and wealth administration division, too, has been thriving and increasing quickly.

MOFS focuses on the excessive internet value people (₹5 crore to ₹25 crore internet value) and extremely excessive internet value people (greater than ₹25 crore) in its wealth administration division. It additionally homes the non-public consumer group.

The wealth administration section has seen its AUM rise 72 per cent YoY over March 2023 and is at round ₹1.24 trillion as of March ‘24. Since charges and fees are a lot increased on this division in comparison with typical retail merchandise, the yields are strong for the corporate.

Within the mutual fund section, AUM has elevated 57 per cent YoY and stood at ₹71, 810 crore as of March 2024. SIP market share has risen from 1 per cent in FY23 to 1.5 per cent in FY24. Whole mutual fund folios have risen practically three-fold, from ₹10.4 lakh in March 2020 to ₹29.6 lakh in March 2024.

Taking the corporate’s AIF, PMS and mutual fund methods, 95 per cent by AUM have outperformed their respective benchmarks.

Non-public fairness and actual property funds have additionally executed moderately nicely for MOFS.

The corporate has a strong treasury funding e book value ₹6,113 crore as of March 2024. It has grown at 25 per cent yearly within the final 4 years from FY20. The XIRR is at a wholesome 18.3 per cent.

MOFS additionally has a housing finance division with an AUM of ₹4,047 crore as of FY24. Progress has been average right here. However asset high quality has improved as gross NPA is simply 0.9 per cent, whereas internet NPA is 0.4 per cent as of FY24. Yield, internet curiosity margin and capital adequacy stay wholesome.