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MOFS reported another quarter of robust performance – in Q1FY26, with operating PAT at Rs5.22bn (up 21% YoY and 1% QoQ), largely driven by a strong show in the Capital Markets segment. However, treasury gain of Rs9.08bn resulted in consolidated reported PAT (incl OCI) of Rs14.3bn. The Wealth Management segment saw a sequential decline in distribution income owing to seasonality, offset by the healthy broking income driving a ~5% QoQ decline in overall revenue. Capital Markets delivered a strong show, with PAT at Rs0.94bn led by sturdy deal activity. The Asset and Private Wealth Management segments saw robust AUM growth; however, increased costs impacted PAT growth. The housing finance business posted a muted show owing to NIM compression. Going forward, the management remains confident about the growth opportunity across the Wealth, Asset, and Private Wealth Management businesses, driven by the financialization megatrend. To account for the Q1 performance, we increase FY26-28E PAT by 4-5% and reiterate BUY, while revising up Jun-26E TP by ~24% to Rs1,050 (from Rs850), given MOFS’s established track record of thriving through volatilities.

Robust performance across the businesses

MOFS delivered a robust performance during Q1FY26, with operating PAT at Rs5.22bn (up 21% YoY; up 1% QoQ). The Wealth Management segment reported ~5% QoQ decline in revenue owing to ~28% sequential fall in distribution income, which was affected by seasonality. However, despite the impact of the new F&O regulations, broking revenue grew 16% QoQ. The Capital Markets segment reported its highest quarterly PAT at Rs0.94bn, backed by strong deal activity across the Institutional Equities and Investment Banking businesses. The Asset Management business saw strong flows, driving 21% QoQ AUM growth. Private Wealth Management saw ~4% QoQ growth in Distribution AUM, though the strong growth in custody AUM led to ~21% QoQ growth in overall AUM. However, higher employee costs resulted in muted PAT growth sequentially.

Outlook strong, albeit market vagaries to bring in intermittent volatilities

The growth opportunity among the Asset, Wealth, and Private Wealth management business is huge, driven by the financialization mega-trend. In the Wealth Management segment, the company is focusing on increasing the cross-sell ratio which will drive growth in distribution income. Addressing the product gaps and with the distribution expansion, the asset management segment is poised for strong growth, which will drive market share gains. Traction among HNIs and UHNIs remains strong and, with productivity improvement across the recently hired RMs, the Private Wealth Management segment should see strong growth. Deal pipeline in the Capital Markets segment remains strong, with several lined-up IPOs and QIPs driving strong revenue and PAT growth.

Poised to capture the long-term growth opportunity; re-iterate BUY

Building in the Q1 developments we increase FY26-28E operating PAT by ~4-5% and retain BUY, while raising Jun-26E TP to Rs1,050 (from Rs850). With its strong franchise strength, increasing distribution presence, and established track record of thriving periods of volatility, MOFS is well poised to capture the LT mega trend of financialization.

Earnings Conference Call Highlights

• The company is focusing on expanding the distribution business, aiming to increase the cross-sell ratio. With a separate third-party product head and dedicated team, the management remains confident of improvement in the cross sell ratio.
• The distribution business has a relatively smaller AUM base, indicating significant room for growth; management focus is moving from broking to distribution, for building a scalable trail-based revenue model.
• The cash volume market share increased to 7.1%, and the company is the largest broker in the cash segment.
• The company plans to launch its own private credit fund in the Alternatives space, thus driving growth in the Asset Management segment.
• Private Wealth Management momentum remains strong, with increasing traction among UHNI and Family Office clients. Improved RM productivity is expected to drive continued growth.
• MOFS announced the final closing of the Real Estate Fund Series VI, with fee-earning AUM at Rs20bn. The company has also launched IBEF V with a target size of Rs80bn, having achieved ~80% of this in Jul-25. With this, the management expects strong growth in the PE-RE AUM going forward.
• Strong deal flows have resulted in robust revenue and PAT growth in capital markets. The deal pipeline among IPOs and QIPs remains strong, and the growth momentum is expected to continue in the next quarter.
• The seasonal nature of collections has resulted in higher GNPA ratio on a sequential basis in the Housing Finance business. Overall, Asset Quality remains robust.
• With increase in the sales force, the management targets doubling the Housing Finance AUM over the medium term.
• The quarter saw higher employee costs on account of senior-level hiring across business segments. The management mentioned that employee cost, a % of ,revenue should remain in line with the previous year’s trend.
• There is an ongoing 'talent war' in Private Wealth Management and Capital Markets, with competitive renumeration offerings; this reflects the expanding size of the opportunity.
• Although the margin trade funding book was lower YoY, spreads improved due to lower cost of funds. Further, the management mentioned that MTF flows picked up strongly toward June, resulting in a lower average MTF book.
• The management mentioned that the retail participation can grow 3-4x from here over the next decade which will lead to continued growth across the businesses.
• The number of families onboarded has seen strong growth. In the HNI segment, the company is focusing on higher coverage, whereas in the UHNI segment, it aims to increase penetration in terms of wallet share.

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