Motilal Oswal Shares Fall on Weak Q2 Earnings and SEBI Fee Cut Proposal

Motilal Oswal Financial Services Limited (MOFSL) experienced a significant share price decline of nearly 6% in early trade following the release of its weak second-quarter earnings for FY26. The company's consolidated net profit plummeted by 68% year-on-year to ₹362 crore, a sharp fall from ₹1,120 crore recorded in the same period last year. Revenue from operations also decreased by 35% to ₹1,849 crore. This downturn led to MOFSL shares touching ₹966.25 on the BSE, pushing its market capitalization below ₹58,300 crore. The stock sentiment was further impacted by a Securities and Exchange Board of India (SEBI) consultation paper proposing a drastic reduction in brokerage fees. The paper suggests lowering fees on cash market transactions from 12 basis points to 2 basis points and on derivatives trades from 5 basis points to 1 basis point, posing a potential threat to revenue streams for brokerage firms. Despite the earnings dip, MOFSL reported robust growth in its Assets Under Management (AUM), which surged 46% year-on-year to ₹1.77 lakh crore, driven by a 57% increase in mutual fund AUM. The private wealth management business also saw a healthy 19% rise in AUM. The capital markets business and housing finance segments also posted positive profit growth. Impact: The weak quarterly results and the potential regulatory changes regarding brokerage fees are expected to exert pressure on MOFSL's stock price in the near term. However, strong AUM growth in key segments indicates underlying business resilience. Rating: 6/10

Heading Difficult Terms: Consolidated Net Profit: The total profit of a company after deducting all expenses, including taxes, from its total revenues, including those of its subsidiaries. Year-on-year (YoY): A comparison of financial data from the current period with the same period in the previous year. Revenue from Operations: The income a company generates from its primary business activities. Assets Under Management (AUM): The total market value of all the financial assets that a financial institution manages on behalf of its clients. Mutual Fund: A type of financial vehicle made up of a pooled amount of money that allows many investors to purchase a collection of stocks, bonds, or other securities. Private Wealth Management: Financial services offered to high-net-worth individuals and families, including investment advice, financial planning, and estate management. SEBI: Securities and Exchange Board of India, the regulatory body for securities and the capital market in India. Basis Points (bps): A unit of measure used in finance to describe the percentage change in a financial instrument or the yield on a fixed-income security. 100 basis points equal 1%.