Value Stock To Buy: Company That Announced Buyback Of Shares At 30% Higher Price

Highest ever annual revenue and profit at Motilal Oswal Financial

The company had a fantastic set of results for the quarter ending March 31, 2022. Motilal Oswal Financial Services reported its highest ever revenue and sales for the period. The company also reported the largest ever yearly Broking revenue & profit. In Retail broking business, strong traction witnessed in new clients addition driven by digital acquisition, total 0.9 mn clients acquired in FY22, +43% YoY. Active clients have registered 59% YoY growth at 0.9 mn as of March 2022. The company also has a strong pipeline of signed IPO mandates which will start entering the markets, as a result further revenue traction can be witnessed in coming quarters.

Apart from brokerage services, the distribution business too saw a robust performance. The distribution business assets under management at Rs 168 billion, was up 31% YoY led by multi fold jump in Net Sales. While the housing finance business may not be as big, the company did put in a good show. Disbursements under the housing finance category grew by 136% YoY to Rs 6.4 billion in FY22. The company reported highest ever profit of Rs 929 mn in FY22 led by robust disbursement growth of 136% YoY to Rs 6.4 bn in the housing finance business.

Asset Management business continue to see solid growth

The asset management business recorded its highest ever profit recorded in FY22 led by strong growth in net flows and average assets under management. The Gross sales of AMC improved 49% YoY in FY22 led by 30% growth in MF and 125% growth in Alternate sales. Further, improvement in performance coupled with decline in redemptions across MF and PMS products has resulted in strong positive net sales of AMC in FY22 as compared to net outflows in FY21. The company also added around 4.8 lakh SIPs in FY22, +54% YoY. New SIP count market share stood at 1.8% in FY22.

Motilal Oswal Financial Services announces buyback of shares

The company continues to create value for shareholders and has now announced a Buyback of fully shares. The same would not exceeding 14.55 lakh Equity Shares (representing 0.98% of the total paid-up equity share capital of the Company as on March 31, 2022) at a price of Rs 1,100 per Equity Share for an aggregate amount not exceeding Rs 160 crores (excluding tax and other buyback related expenses). The company has decided to use "Tender Offer" route for acquisition of shares and the record date for the same has been fixed as May 27. The buyback of shares at the company is at a reasonable price of Rs 1100, against the current market price of Rs 830, leaving profits for investors.

Buy the shares of Motilal Oswal Financial Services as fundamentals are sound

For the year ending March 31, 2022, the company reported an EPS of Rs 88. The stock is currently prices at around Rs 830, which is less than 10 times the price to earnings multiples. We believe that company's that are showing a good growth rate deserve a better valuation. Apart from this, we believe that the entire product portfolio would do well in the future from broking to housing finance to asset management. India is an under penetrated market in terms of mutual fund investing, portfolio management services and broking business. All these offer tremendous potential for companies like Motilal Oswal Financial Services. The growth potential at the company, reasonable valuations and a buyback of shares, make the stock an attractive buy at the current levels.