Motilal Oswal Q2 Results: PAT nearly quadruples to Rs 1,070 crore; revenue up 20%

Motilal Oswal posted strong quarterly operating profit growth, led by asset management and private wealth, as rising AUM and recurring revenue supported earnings resilience.

The company's total PAT, including other comprehensive income (OCI), surged to Rs 1,070 crore from Rs 285 crore in the corresponding quarter last year, representing a nearly fourfold increase.

However, total PAT declined 29% sequentially from Rs 1,513 crore in the June quarter, reflecting lower mark-to-market gains on treasury investments. Operating PAT increased 18% quarter-on-quarter from Rs 609 crore.

Net operating revenue rose 20% YoY to Rs 1,757 crore from Rs 1,460 crore, while increasing 14% sequentially from Rs 1,538 crore.

Profit before tax from operating businesses increased 26% to Rs 933 crore from Rs 739 crore, while the operating PBT margin improved to 53% from 51%.

Motilal Oswal's asset management business emerged as the biggest contributor to earnings growth, reporting a 69% YoY increase in PAT to Rs 304 crore from Rs 180 crore.

The segment accounted for 43% of the company's operating profit during the quarter. Total assets under management (AUM) in the asset management business increased 26% YoY to Rs 2.23 lakh crore.

Within this, the mutual fund, portfolio management services and alternative investment funds business managed assets of nearly Rs 2 lakh crore, up 25%. Its alternatives business reported a 92% increase in revenue, supported by fundraising and the launch of new investment strategies. AUM in this business increased 36% to Rs 23,091 crore.

The company's mutual fund net inflow market share stood at 4% for the quarter, increasing to 6% in September. Systematic investment plan (SIP) inflows stood at Rs 4,170 crore during the quarter.

The combined asset and private wealth management segment reported a 43% increase in PAT to Rs 416 crore from Rs 290 crore. Revenue from this segment grew 32% to Rs 854 crore, supported by rising assets under management.

The private wealth management business saw its AUM increase 58% YoY to nearly Rs 3 lakh crore. Its lending book grew 90% to Rs 7,333 crore. The broader wealth management business, which includes retail broking, distribution and lending, reported a 3% increase in PAT to Rs 175 crore from Rs 170 crore.

Its distribution AUM increased 26% to Rs 47,912 crore, while the lending book expanded 42% to Rs 10,197 crore.

Capital markets PAT declined 5% YoY to Rs 85 crore from Rs 89 crore, although it increased 12% sequentially.

The company said its investment banking business ranked first in qualified institutional placements and third in IPOs during the first half of FY27.

Motilal Oswal's housing finance business reported a 7% YoY increase in PAT to Rs 36 crore from Rs 34 crore.

Disbursements increased 29% to Rs 701 crore, while AUM grew 24% to Rs 6,476 crore.

The company's gross non-performing asset ratio stood at 1.5%, while net NPAs remained at 0.9%. Motilal Oswal reported annual recurring revenue (ARR) assets of Rs 3.2 lakh crore, up 26% YoY.

ARR revenue increased 27% to Rs 1,182 crore, while its contribution to total operating revenue rose to 66%.

The company said the growing contribution from asset management and private wealth management was helping improve the predictability of earnings.

"Asset Management is now our largest profit pool, and two-thirds of our revenue is recurring, which makes our earnings more resilient through market cycles," said Motilal Oswal, MD and CEO.

The company's treasury investment book increased 27% YoY to Rs 11,346 crore.

Disclosure: This article has been written by Podishetti Akash, who is not a SEBI-registered Research Analyst or an Investment Adviser. Podishetti Akash and his ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclosures here.