By Madhvendra
Motilal Oswal Financial Services (MOFSL) has delivered a remarkable 225% share price growth over the last five years, driven by its strong broking and asset management foothold. The surge in retail stock market participation, rising mutual fund investments, and India’s expanding financial ecosystem have provided a strong tailwind for its growth.
The company’s broking business continues to benefit from higher trading volumes, while its asset management arm has scaled significantly. Even its housing finance segment, which faced challenges, is showing signs of stability.
But does this stock rally reflect its financial performance fully? Are current valuations still attractive? This analysis breaks down MOFSL’s key business segments, focusing on wealth and asset management, which drive most of its revenue.
We also evaluate its growth trajectory and valuation metrics to assess if the stock still holds investment appeal.
Let’s understand its business segment.
MOFSL is a diversified financial services firm, offering various services involving capital markets, asset and wealth management, and housing finance.
MOFSL Group Structure

The capital markets segment contributes 47% to its revenue, 27% comes from asset and wealth management, 8% from the housing finance segment, and 19% from treasury investments. As of FY24, it had a total asset under management of ₹3.8 trillion.
Capital market segment
MOFSL operates through three primary business divisions: broking, investment banking, and distribution of financial products, including mutual funds.
The broking division accounts for 62% of capital market segment revenue, with 11% derived from product distribution. Investment banking contributes 3%, while net interest income from the margin trading facilities brings in 20%.
Let’s talk about its broking division under the capital market segment.
Flourishing full-service broker
MOFSL was one of the traditional brokers which encountered challenges from digital disruption, mainly due to the rise of discount broking. Then, to safeguard itself, it adopted the broker-distributor model, which ultimately transformed into a leading broker.
MOFSL has thrived post-pandemic, benefiting from a substantial rise in Demat accounts amid increased retail investor engagement. It is one of the big beneficiaries of the capital market boom.
MOFSL’s strength in the brokerage sector is evident, as its average daily turnover in futures and options has skyrocketed at a 122% CAGR over the last five years, reaching ₹5.55 trillion, despite stiff competition from discount brokers.
Consequently, its market share rose to 8.7% in FY24, up from 2.8% in FY20. In addition to F&O, the company has also gained significantly in the cash segment, with its market share rising to 8.2% in FY24, up from 5.7% in FY20.
Furthermore, according to Emkay Global, MOFSL is the number one broker in gross brokerage income among full-service players and is among the top three industry players.
Its emphasis on high-value customers has enabled it to achieve the highest revenue per customer (ARPU) in the industry.
Notably, its broking ARPU stands at ₹30,130, which has increased over 35% in the last one year, driven by market share gain and average daily turnover as investors rushed to cash in on the the bull market.
In comparison, its competitors: Angel One, ICICI Securities, and IIFL Securities—report ARPUs of ₹4,821, ₹7,342, and ₹13,734, respectively, as of Q3FY24.
Robust growth in broking segment with industry leading ARPU

Moreover, its focus on high-value clients has also helped it achieve robust growth in its DP AUM (excluding Wealth management), which has increased at a 48% CAGR to ₹2.26 trillion. Seventy percent of its customers’ DP balances are greater than ₹10 million range.
The company has the largest franchise house, with over 8,000 franchisees covering 98% of the pin codes. Despite being a full-service broker, the company is expected to grow significantly with the increase in equity penetration, which is relatively low compared to emerging markets.
Thriving interest income from Margin Trading Facility
Furthermore, MOFSL offers its clients a margin trading facility (MTF), earning a yield of 13-14%. This results in a net interest margin of 5-6% on its MTF book. Interest income is the second highest revenue driver for the division, generating ₹2.2 billion, which has grown by 42% over the last year.
The company employs a strong risk management process, and this book is backed by clients’ demat holdings, protecting it from non-performing assets.
The MTF book has experienced significant growth. In just seven months, until October, the total industry MTF book increased by 50%, rising from 571 billion in FY24 to 84800 billion.
This book is projected to grow rapidly in the upcoming decades as penetration increases and more traders discover its benefits, leading to further expansion of MTF funding.
Financial product distribution
Coming to its distribution services, MOFSL offers a complete financial distribution platform that includes various services, including mutual funds, wealth management, insurance, financial planning, and loan solutions.
It has capitalised on the company’s large customer base to enhance cross-selling opportunities, resulting in its distribution assets under management (AUM) increasing at an impressive 38% CAGR to ₹270 billion over the past five years. Moreover, its acquisition of new clients facilitated by the acquisitions of small regional brokers also supported this growth.
It earns a commission on sold products, which rose 28% in FY24 to ₹0.88 billion. The company believes that its distribution penetration is under 6% of its extensive client base of 4 million, offering significant cross-selling opportunities.
It plans to triple its RM in the coming years, which it believes would help it increase penetration and drive revenue growth.
Lastly, MOFSL’s investment banking team is one of the largest in India, excelling in raising record funds through initial public offerings and qualified institutional placements.
Financial Performance of the Capital Market Division
The capital market segment accounts for 47% of the company’s revenue. The company has capitalized significantly on the bull market, with its revenue increasing by 37% compared to last year, reaching ₹23.6 billion.
Highest-ever Ever Quarterly and Yearly Profit in the Capital Market Segment

On the other hand, operating profit after tax (PAT) has increased by 47% to ₹8.0 billion. Furthermore, this PAT has grown at a CAGR of 33% over the last five years, driven by increased market participation and intensified trading activity. Operating PAT here means PAT of core segment excluding intercompany adjustments.
Now, let’s shift to its Asset and Wealth Management Segment.
This segment comprises mutual funds and wealth management, which caters to ultra-high-net-worth individuals (UHNI), HNIs, and retail customers with a net worth between ₹1 and 5 crore.
Wealth Management
MOFSL’s wealth management (WM) division has experienced robust growth, benefiting from favourable industry conditions and strong capital market performance.
WM AUM has experienced remarkable growth in the last five years, expanding at a more than 50% CAGR. By the end of FY24, AUM had soared to an impressive ₹1.24 trillion. This figure surged 72% in the past year, highlighting the company’s strong performance and growing market presence.
WM AUM growing with strategic RM hiring

This impressive growth in AUM has been fueled by the recruitment of relationship managers (RMs), improved productivity among RMs, deeper engagement with existing clients, and mark-to-market gains on investments.
MOFSL aims to expand in this sector as the Indian economy is anticipated to lead globally in the number of Ultra High Net Worth Individuals (UHNWIs) and High Net Worth Individuals (HNWIs).
According to the Knight Frank Wealth Report, India’s UHNWIs are expected to increase by 50%, from 13,263 in 2023 to 19,908 by 2028, compared to a global growth rate of 28.1%.
This projected growth presents an opportunity worth $2.5 trillion. Additionally, India’s low market penetration highlights significant potential for substantial AUM growth in the coming years.
MOFSL’s primary focus is increasing the number of RMs while enhancing their productivity. Furthermore, the firm has adopted an open architecture model to offer non-captive products, which is anticipated to drive incremental sales.
Asset Management Segment
Motilal Oswal Asset Management Company (MOAMC) has experienced strong growth, driven by a sharp rise in mutual fund AUM and record-high systematic investment plan (SIP) inflows. In addition to MF, it operates in the alternate asset segment.
The AMC’s AUM has grown at a CAGR of ~20% over the past five years, reaching ₹718 billion in FY24 from ₹292 billion in FY20. Of this, Rs 481 billion comes from MFs, with its SIP accounts and folio numbers growing 2.7x and 2x in the last 5 years to 84 million and 178 million, respectively.
This expansion has been fueled by the fund’s top-quartile performance across schemes, with 82% of its strategies outperforming the benchmark as of FY24. Launching new mutual fund schemes has led to strong gross sales and increased folios.
The AMC’s focus on active mutual fund strategies has resulted in gross sales surging 2.7x in FY24 to ₹61 billion. Additionally, sustained SIP inflows have helped the company gain 0.5% market share, bringing its total to 1.7%, despite increased competition in the MF segment.
While MOAMC has built a strong foothold in the equity segment, recent trends indicate growing traction in passive AUM, driven by the rising popularity of index investing and a steady stream of new fund launches.
Strong Growth in MF AUM with strong SIP Book

However, despite this, its revenue yields remain the best in the industry at approximately 0.73%, even as yields decreased from 0.85% in FY20 due to tier-based pricing as AUM expands.
The company continues to benefit from a higher share of equity-oriented funds, which keeps its yields ahead of peers with more diversified portfolios.
Furthermore, the remainder of the AUM comes from PMS and AIF, in addition to MF AUM. Performance-linked fees generate 54% of the non-MF AUM. The company aims to promote a greater share of performance-fee-linked AUM in PMS and AIF to strengthen net yields.
MOFSL net yield remains the highest in the industry

In FY24, its asset and WM segment revenue grew 31% over the previous year to ₹17.7 billion, while its operating PAT grew 34% to ₹2.1 billion. The segment PAT has grown at a strong CAGR of 19% in the last five years.
Moving forward, MOAMC is prioritizing the growth of its equity AUM, mainly via direct channels, representing about 46% of gross flows. The firm has invested in upgrading its distribution infrastructure, strengthening sales initiatives, and increasing its branches. These initiatives, backed by positive industry trends, aim to drive future AUM growth.
What about overall Financials?
MOFSL has shown strong financial performance in the last 5 years. Its revenue has grown at a CAGR of 24% to ₹71 billion in FY24, while operating PAT has grown at a CAGR of 25% to ₹15 billion. The company is expected to increase its operating PAT by 15-20% CAGR in the coming years.
One unique aspect of MOFSL is its strategy of directly investing operating cash flows in equity markets. This involves reinvesting free cash flows from its operations into the treasury, which always remains fully allocated to equity products.
Notably, its treasury book has compounded at around 44% annually to ₹61 billion. This has been driven by a strong internal rate of return (IRR) of 18% and cash redeployment after paying dividends and three buybacks. Moreover, it expects this IRR to be sustained in the future.
This approach ensures that the company has a vested interest, as it invests in all the offerings made to investors. Consequently, this strategy has resulted in significant growth in net worth over the past decade, which has increased at a CAGR of 22%, rising from ₹11.7 billion in FY14 to over ₹87 billion.
Seventy percent of this net worth is in the form of treasury investments, which boost the value of its core businesses.
Strong growth across segments, including revenue, PAT, and net worth

The high profitability of this capital-light approach has driven a notable increase in return on equity (RoE), which surged to 35% in FY24, compared to only 4% in FY20.
Consequently, its share price has also compounded at a 25% CAGR, resulting in a robust re-rating.
MOFSL share price surged 3.5x in the last 1.5 years before correcting

Is valuation worth looking at now?
We assessed MOFSL’s valuation using the price-to-earnings (P/E) ratio. The current P/E is 11.4, 43% lower than the 10-year median P/E of 21.2.
Notably, it briefly reached the median P/E in October last year before falling back to its current value. Comparatively, it trades at a 13% discount to ICICI Securities’ P/E of 13.1 and a 25% discount to Angel One’s P/E of 15.7.
The current volatility in the equity market has resulted in a 32% drop in share price, which has not only made the company’s valuation more attractive with a solid risk-reward ratio but has also rendered it relatively cheaper.
However, note that the business is cyclical and depends on capital market performance. The current slowdown will likely affect its revenue in the short term. Moreover, annuity-like revenue from its AUM will help sustain it, although with some fluctuations.
In addition, SEBI regulations, including measures to reduce retail investors’ participation in F&O, are a major risk that will definitely impact its business and, hence, its revenues to some extent.
To conclude, the company has delivered strong performance across business cycles for over a decade, demonstrating its ability to navigate market volatility. Its diversified revenue streams focus on scaling high-margin segments, and disciplined capital allocation provide resilience against short-term fluctuations.
Over the long term, continued growth in AUM and a strong SIP book, along with increased participation from retail investors as equity penetration rises, could sustain the growth rate in the coming years.
Emkay acknowledges that continuing market volatility will affect its revenues and pose challenges in the short term. Nevertheless, the company is confident that its strong market position, established over years of managing market fluctuations, equips it to withstand these difficulties.
Its proven franchise performance makes it well-prepared to succeed, even in today’s challenging environment. Consequently, Emkay has set a target price of ₹900, indicating a 43% upside from the current price.
Disclaimer:
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Madhvendra has been deeply immersed in the equity markets for over seven years, combining his passion for investing with his expertise in financial writing. With a knack for simplifying complex concepts, he enjoys sharing his honest perspectives on startups, listed Indian companies, and macroeconomic trends.
A dedicated reader and storyteller, Madhvendra thrives on uncovering insights that inspire his audience to deepen their understanding of the financial world. You can connect with Madhvendra on LinkedIn to explore more of his insights and engage in meaningful discussions.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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