Motilal Oswal Q2 Profit Dips 68%, Core Businesses Show Strength

Introduction

Motilal Oswal Financial Services Ltd (MOFSL) announced a challenging second quarter for the fiscal year 2025-26, with consolidated net profits declining sharply. The company's revenues also saw a significant drop both on a sequential and year-on-year basis. However, a closer look at the financial results reveals a resilient performance in its core business segments, which posted record operating profits, painting a more nuanced picture of the firm's health amidst market volatility.

Consolidated Financial Performance in Q2 FY26

For the quarter ending September 2025, MOFSL reported a consolidated net profit of Rs 362.42 crore. This represents a steep 67.7% year-on-year (YoY) decline from Rs 1,120.08 crore in the same quarter of the previous fiscal year. On a quarter-on-quarter (QoQ) basis, the net profit fell by 68.8% from Rs 1,162.06 crore in Q1 FY26.

The company's consolidated revenues for the quarter stood at Rs 1,859.87 crore, marking a 32.2% decrease QoQ and a 34.6% decrease YoY. Meanwhile, expenses for the quarter increased by 2.8% sequentially, although they were down 3.8% compared to the previous year. The earnings per share (EPS) for the quarter stood at Rs 5.97, reflecting the pressure on profitability.

Strength in Core Business Operations

Despite the weak consolidated numbers, the company's underlying business segments demonstrated robust growth. The operating Profit After Tax (PAT) reached a record high of Rs 554 crore, growing 2% YoY and 4% QoQ. This performance highlights the strength of its diversified business model.

Asset and Wealth Management: The Asset Management division was a standout performer, with its PAT surging 46% YoY to Rs 180 crore. This growth was fueled by a 46% jump in total Assets Under Management (AUM) to Rs 1.77 lakh crore. The Private Wealth Management business also delivered a strong 23% YoY PAT growth, reaching Rs 110 crore, as its AUM rose 19% to Rs 1.87 lakh crore.

Capital Markets and Housing Finance: The Capital Markets segment registered a 24% YoY PAT growth to Rs 90 crore, maintaining its leadership position in merchant banking. The Housing Finance division’s PAT climbed 27% YoY to Rs 34 crore, supported by a 48% YoY growth in disbursements.

Key Financial Metrics

A summary of Motilal Oswal's key financial metrics provides further insight into its valuation and financial health.

Stock Performance and Technical Outlook

The company's stock has reflected recent market pressures. As of the last trading session, the share price was Rs 863.35, a decrease of 3.39% from its previous close. Over the past month, the stock has declined by 10.03%, and its one-year return stands at -5.67%. However, its long-term performance remains impressive, with a 3-year return of 403.3% and a 5-year return of 464.79%.

Technical indicators suggest a bearish short-term trend. A 200-day moving average crossover appeared on December 26, 2025, a signal that has historically been followed by an average price decline of 4.51% within 30 days. Similarly, a 20-day moving average crossover also signaled bearish sentiment.

Long-Term Strategy and Analyst View

Motilal Oswal has been building a substantial treasury book, which has grown to Rs 8,957 crore, inspired by Warren Buffett's investment philosophy. This strategy acts as a second growth engine, contributing to a 31% decadal operating profit CAGR without raising external equity. The firm continues to reinvest operating profits, which has driven a 42% CAGR in its treasury investments.

Despite the recent dip in quarterly profits and negative short-term technical signals, analysts maintain a positive outlook. Based on recommendations from four analysts, the stock holds a 'Strong Buy' rating, indicating confidence in its long-term growth potential and the fundamental strength of its core operations.

Market Context

Motilal Oswal's research arm remains a prominent voice in the market, forecasting India’s GDP to grow from $1 trillion to over $16 trillion by 2042. The firm has identified key sectors like autos, financials, and capital goods as major beneficiaries of this long-term structural growth. This broader economic optimism underpins the company's strategic positioning and its focus on wealth creation for its clients.

Conclusion

Motilal Oswal Financial Services' Q2 FY26 results present a mixed picture. While the consolidated profit and revenue figures show significant declines, the underlying operational strength across its core business verticals tells a story of resilience and continued growth. Investors may weigh the short-term stock price volatility and bearish technical signals against the company's strong long-term performance, robust core business growth, and positive analyst ratings. The firm's strategic focus on building its treasury and capitalizing on India's long-term economic expansion remains a key factor for its future trajectory.