MOTILAL OSWAL FINANCIAL Results News

Motilal Oswal Financial services has posted disappointing consolidated results for September 08 quarter with a drop in bottomline by 17.07% from Rs.32.69 crores to Rs.27.11 crores. The topline showed a decline of 9.08% from Rs.151.54 crores to Rs.137.78 crores. If we look to these results in the present context of the market, the same may not look as bad.

But the concern has been mainly due to drop in its core revenue of broking and related activities from Rs.135.11 crores to Rs.102.51 crores. However, investment banking and financing activities has helped the company as income from these rose to Rs.35.71 crores from Rs.15.87 crores. The concern has been more due to sharp fall in EBIT from core business of broking from Rs.42.24 crores to Rs.23.14 crores.


The company has been trying hard to control its costs and seems to be rationalizing its manpower, which is evident from the employees costs of Rs.36.32 crores in Sept. 08 quarter against Rs.43.73 crores in September 07 quarter and Rs.41.44 crores in June 08 quarter. Operating costs have also been curtailed to Rs.28.22 crores for September 08 quarter against Rs.37.50 crores of the corresponding quarter in the previous year while it was at Rs.30.13 crores in June 08 quarter.


It is feared that a sizeable amount of doubtful debts have not been provided for by these broking companies in the hopes of revival of business by the defaulting clients. This appears to be a distant dream now in view of volatile market conditions.

The company had posted an EPS of Rs.3.75 for first half but one cannot assume that expected EPS for FY 09 would be close to Rs.7.50 as anything can happen in the second half. The present market capitalization of the company at Rs.1,065 crores with enterprise value at Rs.1,250 crores make the stock still overpriced at Rs.75 considering its expected net worth of Rs.700 crores.


Share now ruling at Rs.75 would continue to remain under pressure and with bearish trend of the market likely to remain in the second half, share price may soon correct to Rs.60 in a month.s time.
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