Motilal Oswal Financial Services gets upgrade from India Ratings; stock reacts

Motilal Oswal Financial Services Ltd (MOFSL) has received a rating upgrade from India Ratings and Research (Ind-Ra), with the agency raising its long-term credit rating to 'IND AA+/Stable' from 'IND AA/Positive'. The upgrade applies to the non-convertible debentures (NCDs) and bank loan facilities of MOFSL and Motilal Oswal Home Finance Ltd, as well as the NCDs of Motilal Oswal Finvest Ltd. Ind-Ra has also affirmed the 'IND A1+' rating on the commercial paper programmes of MOFSL, Motilal Oswal Finvest and Motilal Oswal Wealth Ltd.

Shares of Motilal Oswal Financial Services were trading at Rs 985.80 on Thursday, up 2.89% from their previous close of Rs 976. The stock opened at Rs 975.50 and touched an intraday high of Rs 1,004.30.

According to Ind-Ra, the upgrade reflects a stronger business profile, supported by the continued scale-up of the group's asset management and private wealth businesses, rising recurring fee-based revenue and sustained profitability growth visibility across key operating segments.

The rating agency also noted that improved earnings diversification has reduced the group's relative dependence on transaction-based income. Comfortable capitalisation, adequate liquidity buffers and the fungibility of liquidity across group entities were cited as additional factors supporting the group's financial flexibility.

Motilal Oswal Financial Services said the rating upgrade recognises the transformation of its business from an equity broking house into an integrated wealth creation platform. The company said around two-thirds of its revenue is now recurring, while its asset and wealth management businesses are leading its profits.

The company's Group Chief Financial Officer Shalibhadra Shah said the upgrade reflects the quality and growth of its earnings, noting the shift towards fee-based, annuity-like revenue streams and a conservative balance sheet. He also said the stronger rating should widen the group's access to diversified funding and support greater efficiency in borrowing costs.

With the latest upgrade, MOFSL said it is now rated AA+ by all three leading rating agencies in India.