Motilal Oswal Financial Services Valuation Shifts to Fair Amid Market Volatility

Valuation Metrics: A Closer Look

As of 19 Feb 2026, Motilal Oswal Financial Services Ltd trades at ₹779.95, slightly down from the previous close of ₹783.60, with a day’s range between ₹777.10 and ₹788.90. The stock’s 52-week high stands at ₹1,097.00, while the low is ₹487.85, indicating significant volatility over the past year.

The company’s P/E ratio currently sits at 23.17, a figure that has contributed to the recent downgrade in its valuation grade from expensive to fair. This P/E is considerably lower than many of its capital markets peers, such as ICICI Lombard (35.72) and SBI Cards (35.90), both classified as very expensive. The P/BV ratio of 3.65 further supports this fair valuation stance, positioning Motilal Oswal below the more stretched valuations seen in the sector.

Other valuation multiples provide additional context: the enterprise value to EBITDA (EV/EBITDA) ratio is 13.89, and the EV to EBIT stands at 14.29. These multiples are moderate compared to peers like Billionbrains, which trades at an EV/EBITDA of 42.84, underscoring Motilal Oswal’s relatively more reasonable pricing.

Comparative Peer Analysis

When benchmarked against its industry rivals, Motilal Oswal’s valuation appears more accessible. For instance, ICICI Prudential Life Insurance commands a P/E of 68.59 and an EV/EBITDA of 71.42, while One 97 trades at an extraordinary P/E of 153.11 and EV/EBITDA of 227.96, both categorised as very expensive. Even Aditya Birla Capital, with a P/E of 25.67 and EV/EBITDA of 15.12, is priced higher than Motilal Oswal.

On the other hand, some companies like REC Ltd and Bajaj Housing are valued more cheaply, with P/E ratios of 5.56 and 29.73 respectively, though their business models and risk profiles differ significantly from Motilal Oswal’s capital markets focus.

Financial Performance and Returns

Motilal Oswal’s return profile over various time horizons highlights its strong long-term performance relative to the broader market. The stock has delivered a 1-year return of 26.87%, outperforming the Sensex’s 10.22% over the same period. Over three and five years, the stock’s returns have been exceptional at 375.04% and 411.40%, respectively, dwarfing the Sensex’s 37.26% and 63.15% gains. Even over a decade, the stock has surged 1,055.91%, compared to the Sensex’s 254.07%.

However, short-term performance has been less encouraging, with the stock declining 3.61% over the past week and 8.35% over the last month, while the Sensex posted modest gains. Year-to-date, Motilal Oswal is down 8.82%, underperforming the Sensex’s 1.74% decline.

Quality and Profitability Metrics

Motilal Oswal’s return on capital employed (ROCE) stands at a robust 18.29%, while return on equity (ROE) is 15.73%, reflecting efficient capital utilisation and profitability. The dividend yield is modest at 0.77%, indicating a focus on growth and reinvestment rather than income distribution.

These metrics, combined with the valuation shift, suggest that while the stock is no longer expensive, it remains fairly valued given its quality and growth prospects.

Market Cap and Analyst Sentiment

The company’s market cap grade is rated 2, indicating a mid-cap status with moderate liquidity and market presence. The overall Mojo Score has declined to 41.0, with the Mojo Grade downgraded from Hold to Sell as of 6 Jan 2026. This downgrade reflects concerns about valuation pressures and near-term performance risks despite the company’s solid fundamentals.

Implications for Investors

The transition from an expensive to a fair valuation grade for Motilal Oswal Financial Services Ltd suggests a more balanced risk-reward profile at current levels. Investors who previously shied away due to stretched valuations may find the stock more attractive now, especially given its strong long-term returns and solid profitability metrics.

However, the recent downgrade to a Sell rating by MarketsMOJO signals caution. The stock’s short-term underperformance relative to the Sensex and the competitive pressures within the capital markets sector warrant careful monitoring. Investors should weigh the company’s quality and growth potential against valuation and market sentiment risks.

Historical Valuation Context

Historically, Motilal Oswal’s P/E ratio has fluctuated significantly, reflecting cyclical trends in the capital markets industry and broader economic conditions. The current P/E of 23.17 is below the peak valuations seen in recent years but remains above the company’s historical lows. This middle ground valuation aligns with the company’s steady ROCE and ROE, suggesting a fair price for its earnings power.

Similarly, the P/BV ratio of 3.65 is moderate compared to historical highs, indicating that the market is valuing the company’s net assets with reasonable optimism but without exuberance.

Sector and Market Comparison

Within the capital markets sector, Motilal Oswal’s valuation is more conservative than many peers, which are trading at very expensive multiples. This relative affordability could attract investors seeking exposure to the sector without paying a premium. However, the company’s Mojo Grade downgrade and modest dividend yield suggest that it may not be the most compelling choice for income-focused or risk-averse investors.

Comparing returns, Motilal Oswal’s outperformance over the Sensex across longer time frames highlights its growth credentials, but the recent short-term underperformance underscores the importance of timing and market cycles in capital markets stocks.

Conclusion

Motilal Oswal Financial Services Ltd’s shift in valuation from expensive to fair marks a significant development for investors assessing price attractiveness. While the stock’s multiples have moderated, reflecting a more reasonable pricing relative to earnings and book value, the downgrade in Mojo Grade to Sell advises prudence. The company’s strong long-term returns and solid profitability metrics remain positives, but short-term headwinds and sector dynamics require careful consideration.

Investors should balance these factors when evaluating Motilal Oswal as part of a diversified portfolio, considering both the opportunities presented by its fair valuation and the risks highlighted by recent market performance and analyst sentiment.

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