ICICI Securities has raised its target price for Motilal Oswal Financial Services to Rs 1,024, citing a strategic move toward stable, recurring revenue. The firm’s shift away from purely transaction-based income is being watched by investors as a key growth driver.
ICICI Securities has issued a report upgrading its target price for Motilal Oswal Financial Services (MOSL) to Rs 1,024. This change comes as the company continues to restructure its business model to focus more on fee-based and recurring income streams rather than volatile, transaction-heavy activities. According to the brokerage, the company's operating profit after tax, excluding its treasury division, rose significantly from INR 3.1 billion in the first quarter of fiscal year 2024 to over INR 6 billion in the first quarter of fiscal year 2027.
Revenue Mix and Business Growth
The core of this transformation is the growth in recurring revenue, which now accounts for a larger portion of the company’s earnings. While this share stood at 55% in the 2024 fiscal year, it has expanded to approximately 60% by fiscal 2026, with projections suggesting it could reach 66% by the first quarter of fiscal 2027. Fee-based revenues, which tend to be more predictable, made up about 41% of the total revenue in the same period.
This shift is supported by growth in the company's asset management and private wealth segments. As of the first quarter of 2027, the assets under management—which covers mutual funds, private equity, and real estate—grew by roughly 31% compared to the previous year, reaching INR 2.1 trillion. Additionally, the private wealth management division saw its recurring assets grow by 40% year-on-year.
Competitive Position and Risks
Motilal Oswal maintains a market share of 4.3% in Systematic Investment Plan (SIP) flows and 4.2% in equity flows, which remains higher than its overall equity market share of 2.4%. While these metrics suggest a strong presence in retail-oriented products, investors should note that the financial services sector is highly sensitive to broader stock market performance. Since a large portion of the company's revenue remains tied to market activity, any significant downturn in the equity markets could impact fee collection and asset valuations.
Furthermore, the company operates in a competitive landscape with other large financial conglomerates and discount brokers. Maintaining market share in equity broking while scaling capital-heavy segments like housing finance requires consistent execution. The brokerage used a Sum-of-the-Parts valuation method to reach the new target price, applying different earnings multiples to the broking, asset management, and housing finance segments. Future performance will largely depend on whether the company can continue to grow its recurring asset base while managing the competitive pressures that define the Indian financial services sector.