Motilal Oswal Q2 Profit Drops 68%, AUM Surges, SEBI Fee Cut Proposal Sparks Concern

Motilal Oswal Financial Services Ltd. announced its financial results for the second quarter of FY26, revealing a significant 68% year-on-year decline in net profit, which stood at ₹362 crore compared to ₹1,120 crore in the prior year's Q2. Revenue from operations also decreased by 35% YoY, falling to ₹1,849 crore from ₹2,841 crore.

Despite the earnings dip, the company's Assets Under Management (AUM) showed strong growth, rising 46% year-on-year to ₹1.77 lakh crore. This expansion was primarily driven by a 57% surge in Mutual Fund AUM and a healthy 19% increase in Private Wealth Management AUM, reaching ₹1.87 lakh crore, attributed to client additions and enhanced productivity.

Additionally, Motilal Oswal Financial Services appointed new members to its Board of Directors, including Pratik Oswal and Vaibhav Agrawal from the promoter group, alongside independent directors Joseph Conrad Agnelo D’Souza and Ashok Kumar P. Kothari.

However, the stock experienced a notable decline of nearly 8% on October 29 following a proposal by the Securities and Exchange Board of India (SEBI) to reduce brokerage fees. The draft regulations suggest lowering brokerage on cash market transactions from 12 basis points to 2 basis points and on derivatives trades from 5 basis points to 1 basis point. This move could potentially impact the profitability of brokerage firms. The stock saw a slight recovery of 1.21% on October 30.

Impact This news has a considerable impact on the Indian stock market and the financial services sector. The SEBI proposal poses a direct threat to the revenue streams of brokerage firms like Motilal Oswal, potentially leading to revised valuations and strategies. The mixed financial results further influence investor sentiment towards the company and its peers. Impact Rating: 8/10

Difficult Terms: * **Year-on-year (YoY)**: A comparison of financial performance between a period and the same period in the previous year. * **Profit**: The financial gain made in a business transaction after deducting all costs and expenses. * **Revenue from operations**: The income generated by a company from its core business activities. * **Assets Under Management (AUM)**: The total market value of assets that a financial institution manages on behalf of its clients. * **Mutual Fund AUM**: The total market value of assets managed by a mutual fund company. * **Private Wealth Management**: Financial services offered to high-net-worth individuals, focusing on investment, financial planning, and wealth preservation. * **Board of Directors**: A group of individuals elected by shareholders to oversee the management of a company. * **Promoter group**: The individuals or entities that founded or control a company. * **Independent directors**: Board members who have no material relationship with the company and are expected to provide objective oversight. * **Securities and Exchange Board of India (SEBI)**: The regulatory body for the securities market in India. * **Brokerage fees**: Commissions paid by investors to brokers for executing trades. * **Basis points**: A unit of measure used in finance to denote one-hundredth of a percentage point. 1 basis point = 0.01%. * **Cash market transactions**: The purchase or sale of a security for immediate delivery and payment. * **Derivatives trades**: Financial contracts whose value is derived from an underlying asset, such as stocks, bonds, commodities, or currencies.