 "Motilal Oswal Financial Services shares gain over 7% on bonus proposal")
Shares of Motilal Oswal Financial Services (MOFSL) surged more than 7 per cent on Friday after the brokerage firm said its board was considering a bonus issue. MOFSL’s board will meet on April 26 to consider a proposal to issue bonus shares to shareholders along with its March 2024 quarter results.
The company’s shares ended at Rs 2,236, up 7.4 per cent over the previous close, valuing the stock broking firm at Rs 33,315 crore.
Market players said the intention to declare a bonus issue was an indication that the March quarter performance had been encouraging.
This week, broking firms Angel One and ICICI Securities reported strong numbers, buoyed by robust growth in trading activity and new client additions.
As of December 2023, the cash balance at MOFSL stood at Rs 3,194 crore, while the bank balance other than cash and cash equivalents was at Rs 6,817.6 crore.
Under the present norms, a company can only make bonus issues from its free reserves.
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Last month, Emkay Research initiated coverage on MOFSL with a 'buy' recommendation and a target price of Rs 2,000.
“At current valuations (adjusted FY26 estimated P/E of 9.8 times), there is enough margin of safety. MOFSL's net worth of about Rs 8,300 crore is spread as follows: around 70 per cent in equity and MF treasury assets, about 15 per cent in a housing finance company, and the rest in fixed assets. This net worth provides an additional margin of safety to valuations of core operating businesses,” said Emkay Research.