Motilal Oswal Financial Services is well placed to benefit from India’s growing shift toward market-linked financial assets, according to UBS, which initiated coverage on the stock with a ‘Buy’ rating and a target price of Rs 1,150, implying an upside of about 37%. 

The brokerage said the company’s transition from a transaction-driven business to an AUM-led, annuity-focused platform could drive stronger earnings visibility, lower cyclicality and a 22% earnings CAGR over FY26-FY29.

UBS on changing dynamics for Motilal Oswal

UBS expects Motilal Oswal‘s assets under management to grow at a 21% CAGR between FY26 and FY29, supported by expansion across wealth management, private wealth and asset management businesses. The brokerage forecasts this to translate into a 19% revenue CAGR over the same period as recurring fee-based income becomes a larger part of the earnings mix.

“MOFSL is transitioning towards a more predictable, annuity-led model, with strong AUM-led growth expected to drive core revenue expansion. The shift towards fee-based businesses is improving revenue visibility, reducing cyclicality and enhancing business quality, with AUM increasingly becoming the key earnings growth driver,” UBS said.

UBS on Motilal Oswal Financial Services: ‘Buy’

UBS initiated coverage on Motilal Oswal Financial Services with a ‘Buy’ rating and a target price of Rs 1,150, implying an upside of about 37%.

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The brokerage values the company on a sum-of-the-parts basis and said the growing contribution from asset management, private wealth management and wealth management businesses justifies a higher valuation than traditional brokerage firms.

UBS said Motilal Oswal currently trades at around 15 times one-year forward earnings and believes the market is underappreciating the company’s increasing share of recurring wealth management and distribution income.

Wealth and asset management businesses to drive growth

UBS expects the company’s AUM growth to be increasingly driven by asset management and private wealth management, which are structurally higher-growth and asset-light businesses.

The brokerage forecasts a 23% AUM CAGR for the asset management business and a 25% AUM CAGR for private wealth management over FY26-FY29. As a result, the share of annuity revenues excluding capital markets is expected to rise from 34.4% in FY26 to 41% by FY30.

According to UBS, this should improve earnings visibility and reduce dependence on more cyclical capital markets and treasury income.

“AUM growth is increasingly driven by AMC and Private Wealth, structurally higher-growth, asset-light and superior return-on-equity segments. We believe the potential recurring revenues, improving mix and higher capital efficiency support a structural upgrade in business quality towards premium asset management and wealth multiples,” the brokerage said.

Operating leverage could support non-linear earnings growth

UBS said Motilal Oswal’s business model benefits from significant operating leverage because growth in client assets does not require a proportionate increase in costs.

The brokerage expects operating profit to grow at a 22% CAGR during FY26-FY29, ahead of its projected 19% revenue CAGR, as platform investments scale and relationship manager productivity improves.

UBS believes profit growth could outpace both revenue and AUM growth as higher-margin advisory, alternatives and wealth-management businesses contribute a larger share of earnings.

The brokerage also expects the company’s cost-to-income ratio to improve as recurring revenue streams expand.

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Financialisation trend remains a long-term tailwind

UBS expects India’s mutual fund industry AUM to grow at an 18% CAGR through FY30, while wealth management pools catering to high-net-worth and ultra-high-net-worth clients are expected to expand at more than 20% annually.

The brokerage said Motilal Oswal is well positioned to capture these trends through its presence across wealth management, private wealth, asset management, alternatives and capital markets businesses.

UBS noted that the company’s consolidated equity market share rose to 8.6% in FY26, while its SIP market share expanded to 4.7%, supported by a sharp increase in inflows and a broader distribution network.

“Continued strength of flows into systematic investment plans, increasing equity participation and improving distribution reach is creating a more stable and recurring flow environment. As a result, the industry is transitioning from transaction-led to AUM-led growth, favouring platforms with strong distribution, brand and advisory capabilities,” UBS said.

Conclusion

UBS believes Motilal Oswal Financial Services is entering a phase where earnings growth will be increasingly driven by recurring client assets rather than transaction volumes. With assets under management projected to grow at a 21% CAGR, operating profit expected to compound at 22% annually and annuity revenues forming a larger share of the business mix.

Disclaimer: The specific stock ratings, target prices, and earnings upside projections discussed in this report are based on institutional equity research from UBS and do not constitute direct buy, sell, or hold recommendations for retail investors. Equity investments in financial services and market-linked asset platforms carry inherent risks, including market volatility, changes in regulatory frameworks, and cyclical fluctuations in systemic investment flows. Because individual financial goals, risk tolerances, and investment horizons vary significantly, readers are strongly advised to consult a SEBI-registered investment advisor or a qualified financial consultant before making specific capital allocations or investment decisions.

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