ICICI Securities has maintained a Buy rating on Motilal Oswal Financial Services, raising its target price to Rs 1,024 from Rs 975, implying 20% upside from the current market price of Rs 855. The brokerage's July 30 first-quarter update shows the diversified financial-services firm's consolidated revenue grew 25% year-on-year to Rs 34.3 billion, driven by asset management and private wealth businesses that now contribute 55% of operating profit. Recurring revenue rose to 66% of the group total, up from 55% two years ago. ICICI Securities values the company using a sum-of-the-parts method across its five business lines, applying a 20% holding-company discount.

Mutual Fund Flows Softened, But Performance Rebounded

Net inflows into the mutual fund business eased to Rs 5.7 billion in the first quarter, down from Rs 6.2 billion the prior quarter, while the private-equity and alternates sleeve saw modest net outflows. Fund performance, however, improved after a rough previous quarter: the firm's small-cap fund returned 12.9% on a one-year basis and climbed to fourth place among 30 peer funds, while its focused-cap fund ranked first among 28 peers. Not every fund fared as well — the flexi-cap and mid-cap funds posted negative one-year returns and ranked near the bottom of their categories. Across the firm's 11 mutual fund, PMS and alternative-investment strategies, 8 outperformed their benchmarks on a three-year basis, representing 63% of total assets.

How the Rs 1,024 Target Is Built

ICICI Securities values each business line separately, applies a price-to-earnings or book-value multiple appropriate to that business, and then discounts the sum by 20% to account for the complexity of a multi-segment holding structure:

Asset management and private equity accounts for the largest single share of estimated value — roughly 39% of the total — reflecting the segment's scale and the premium multiple applied to its recurring fee income. The brokerage notes that removal of the 20% holding-company discount, while not its base case, represents a potential upside risk to the target.

Financial Summary

Key Risks for Investors

ICICI Securities flagged two principal risks to its call: a broad downturn in capital markets, which would pressure transaction-based revenue across broking and investment banking even as the recurring-revenue mix has grown, and deterioration in mutual fund performance, which could slow the asset-management segment's AUM growth and, in turn, the eligibility of additional funds for wider distribution — only six of the firm's funds currently carry the three-year track record needed for broader recommendation, with two to eight more expected to cross that threshold over the next two fiscal years.