Motilal Oswal Financial Services Limited (MOFSL), a leading financial services company, has reported a significant decline in its Q2 consolidated net profit while simultaneously announcing strategic board appointments and ambitious growth targets for the coming years.

Financial Performance

For the quarter ended September 30, MOFSL reported:

• Consolidated net profit of ₹36.26 crore, down from ₹111.2 crore in the same period last year
• Revenue stood at ₹184.9 crore, compared to ₹284 crore year-over-year
• EBITDA for the quarter was ₹84 crore, down from ₹181 crore in the previous year
• EBITDA margin decreased to 45.42% from 63.92% in the prior year period

The company successfully raised ₹5 crore through private placement of Non-Convertible Debentures (NCDs) during the quarter.

Board Strengthening Initiatives

In a move to bolster its strategic leadership and governance, MOFSL announced key appointments to its Board of Directors:

1. Promoter Group Appointments:

   • Mr. Pratik Oswal and Mr. Vaibhav Agrawal from the Promoter Group have been appointed to the Board.

2. Independent Directors:

   • Mr. Joseph Conrad Agnelo D'Souza (Mr. Conrad D'Souza), a senior HDFC Group veteran with four decades of experience.
   • Mr. Ashok Kumar P. Kothari, a senior IRS officer with three decades of distinguished career.

These appointments are subject to shareholder approval and necessary regulatory clearances.

Strategic Implications and Future Outlook

Mr. Motilal Oswal, Co-founder and Chief Executive Officer of MOFSL, commented on the appointments: "I am delighted to welcome the next generation of our Promoter Group to the Board. Pratik and Vaibhav bring along the values, vision, and entrepreneurial spirit on which the Motilal Oswal Group was built. Their presence marks an important milestone in the Group's journey that blends legacy with fresh thinking and long-term ambition."

He added, "We are also pleased to welcome Mr. Conrad D'Souza and Mr. Ashok Kumar P Kothari to the Board. Their leadership, integrity, and domain expertise will add immense value to our governance processes and strategic direction."

Despite the decline in quarterly profits, MOFSL has set targets for the future:

• The company expects 20-22% compounded PAT growth through FY27.
• Assets Under Administration (AUA) are projected to surpass ₹6 trillion.
• Fee-based revenue share is expected to rise to 80%.
• MOFSL plans continued expansion in AMC, private wealth, and alternative investments.

The company's strategy focuses on deepening retail and institutional participation through FY27. This approach builds on MOFSL's track record, having achieved a 24% CAGR in net worth and 39% CAGR in AUA over the past decade.

Current Position

Motilal Oswal Financial Services currently employs over 13,250 professionals, serves more than 13.6 million clients across 550+ cities, and manages assets under advice (AUA) of approximately ₹6.5 lakh crore.

Shares of Motilal Oswal Financial Services experienced a sharp decline of nearly 8% following the Securities and Exchange Board of India's (SEBI) announcement of draft regulations proposing significant reductions in brokerage fees paid by mutual funds. The regulatory body's proposal has sent ripples through the financial services sector, particularly affecting brokerage firms.

Key Points of SEBI's Proposal

SEBI's draft regulations include substantial cuts to brokerage fees:

Market Reaction and Expert Opinions

The proposal has triggered varied responses from market participants and analysts:

1. Market Impact: Motilal Oswal Financial Services' stock price dropped to ₹1,009.20, reflecting investor concerns about the potential impact on the company's revenue.

2. Analyst Perspectives:

   • Pratik Gupta of Kotak Institutional Equities suggested that free market forces should prevail in determining brokerage fees.
   • Ashish Somaiyaa of Whiteoak Capital AMC estimated a total impact of 10-12 basis points if the proposal is implemented.

3. Industry-wide Effects: Market analysts expect small and mid-sized brokers to be particularly affected by these changes, potentially reshaping the competitive landscape in the brokerage industry.

Stock Performance Context

Despite the recent decline, Motilal Oswal Financial Services' stock has shown resilience:

The proposed regulations, if implemented, could significantly alter the revenue models of brokerage firms, potentially leading to industry-wide adjustments in business strategies and operational structures. As the financial services sector awaits the final regulations, market participants will be closely monitoring developments and their potential implications for the industry landscape.