Motilal Oswal surges 5% on broking division hive off, 17x jump in Q1 net profit

Motilal Oswal Financial Services (MOSFL) share price jumped over 5 percent on July 28 after the firm announced a 17-fold rise in net profit to Rs 527 crore for the quarter ended June 2023, along with several internal restructuring measures.

The company has decided to transfer its broking and distribution business into Glide by way of slump sales. Glide, a wholly-owned subsidiary of MOFSL, is currently in the process of change of name to Motilal Oswal Broking and Distribution Private Limited.

Furthermore, the company will be demerging its wealth business from its wholly-owned subsidiary Motilal Oswal Wealth Limited into parent company MOFSL.

At 11 am, the stock was quoting at Rs 847.60 on the NSE, up 3 percent from the previous close. It also hit a 52-week of Rs 888.70 in early trade. The stock had surged 12 percent ahead of the board meeting for restructuring.

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The restructuring is being carried out to comply with the NSE Circular which states that a broking company is not permitted to engage in any business other than that of securities i.e. broking company cannot have Motilal Oswal Home Finance Limited (MOHFL) and Motilal Oswal Finvest Limited (MOFL) as its subsidiaries.

The proposed restructuring is between the holding and subsidiaries and has no implication at the consolidated level, said MOFSL in an exchange filing.

For the quarter ended June, the company’s topline doubled year-on-year to Rs 1,530 crore. Its ADTO (average daily turnover) grew by 171 percent YoY to Rs 4,12,400 crore, while NSE active client market share stable at 2.5 percent.

The investment banking division completed six deals worth Rs 3,730 crore in the June quarter. Further, there is a strong pipeline of ECM mandates, which is expected to fructify in the coming quarters, said the company.

The asset management business AUM across MF, PMS and AIF stood at Rs 51,500 crore, up 19 percent on-year and 13 percent sequentially.

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