MOTILALOFS - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 3.6

📊 Financial Overview

• Profitability: PAT dropped to ₹194 Cr from ₹532 Cr QoQ — a 67.2% decline
• Margins: ROCE at 17.8%, ROE at 21.4% — healthy but under pressure
• Debt Profile: Debt-to-equity ratio of 1.16 — moderately leveraged
• EPS: ₹16.8 — supports valuation but impacted by earnings volatility
• Dividend Yield: 0.51% — modest shareholder return

📈 Valuation Metrics

• P/E Ratio: 58.2 — significantly above industry average of 17.1
• P/B Ratio: ~7.2 — premium valuation relative to book value ₹135
• PEG Ratio: 2.30 — suggests overvaluation relative to growth
• Intrinsic Value: Estimated around ₹850–₹900 based on normalized earnings

🏢 Business Model & Competitive Edge

• Core Operations: Diversified financial services firm with presence in asset management, broking, wealth management, and housing finance
• Moat: Strong brand, wide distribution network, and leadership in equity investing
• Growth Drivers: Rising retail participation, AUM growth, and digital distribution

📌 Entry Zone Recommendation

• Suggested Entry: ₹880–₹920 — near DMA200 and below RSI midpoint
• Technical Indicators: RSI at 48.2 (neutral), MACD positive — mild bullish momentum

📈 Long-Term Holding Guidance

• Hold for long-term if accumulated near support; monitor earnings consistency and AUM growth
• Valuation needs to cool before aggressive accumulation

✅ Positive

• Strong ROE and ROCE
• Low RSI and MACD support potential rebound
• FII and DII holdings increased

⚠️ Limitation

• High P/E and PEG ratios
• QoQ profit dropped 67.2%
• Moderate leverage with debt-to-equity at 1.16

📰 Company Negative News

• Q4 FY25 earnings missed estimates due to lower broking income and mark-to-market losses

🌟 Company Positive News

• Strong growth in AUM and wealth management segments
• Retail investor base expanded significantly in FY25

🏭 Industry

• Financial services industry P/E at 17.1 — Motilal trades at a premium
• Sector driven by capital market activity, retail flows, and digital adoption

🧾 Conclusion

• Motilal Oswal is a fundamentally sound financial services firm with strong brand and diversified revenue streams
• Accumulate cautiously near support zones; long-term outlook depends on earnings normalization and market sentiment