Shares of Motilal Oswal Financial Services rallied 5% in early trade after the opening bell on Friday, June 12, after global brokerage UBS initiated coverage on the stock with a bullish 'buy' rating. UBS has pegged a target price of Rs 1,150 on the domestic brokerage and eyes a potential upside of 34.66% from the last closing price. The stock gained momentum as the stock market rallied amid strong global cues. BSE Sensex rallied over 1,000 points while the NSE Nifty 50 surged past 23,400 mark.
Motilal Oswal Financial Services stock opened at Rs 854.70. over 3% higher than its previous close of Rs 831.60 and extended gains upto 5% to hit an intraday high of Rs 880.95 apiece on the NSE. Shares last traded 4.73% higher at Rs 879.90 against a 0.78% rise to 23,343.05 in the benchmark NSE Nifty 50 index. The stock has gained 3.6% in one month and on an year-to-date basis and nearly 5% in the last one year. The brokerage commands a market cap of Rs 52,429.06 crore, as per NSE data.
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Motilal Oswal Share Price Intraday
UBS Bets on Motilal Oswal, Eyes nearly 40% Upside
UBS believes brokerage Motilal Oswal Financial Services is well positioned to benefit from the ongoing financialisation of savings in India. It eyes Motilal Oswal as a structural beneficiary of the rapid expansion in assets under management (AUM) in the financial services industry. According to UBS, Motilal Oswal's transition towards an AUM-led business platform is a key differentiator and could drive non-linear earnings growth over the coming years.
UBS expects the company's AUM to grow at a compound annual growth rate (CAGR) of 21% between FY26 and FY29, supporting a 19% revenue CAGR during the same period. This growth in AUM is anticipated to directly translate into a 19% revenue CAGR for the same period, said UBS in its note. UBS also expects the improved business mix and operating leverage to drive a 22% earnings CAGR through FY29 for the domestic brokerage giant.
The brokerage also believes the market is underestimating the extent of MOFSL's business transformation. The company is increasingly shifting its revenue mix towards wealth management and distribution businesses that generate higher-quality, recurring earnings, reducing dependence on the more cyclical broking segment. As recurring income streams contribute a larger share of profits, the brokerage sees scope for a valuation re-rating in the stock.
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