Target: ₹7,765
CMP: ₹6,554.50
Nuvama Wealth Management’s overall AUM growth was robust with it totaling ₹4.4 lakh crore at end Q2FY25. The PAT number of ₹260 crore was up 77 per cent yoy and it beat our estimates. Capital markets stole the show with a 90 per cent and 98 per cent yoy growth in AUM and revenues, respectively.
The recent equity market rule changes or even an equity market slowdown should still lead to elevated levels in the division’s performance. The wealth businesses saw hiring of RMs (relationship managers) leading to elevated C/I ratios but we believe the ratio to taper down in the medium term. Management is confident to bring cost to income ratio to below 60 per cent in the next 2-3 years.
We increase our AUM and net profit estimates baking in a strong Q2. Factoring in the revised estimates, we arrive at a revised TP of ₹7,765 (vs ₹7,180) prompting us to change our rating from Reduce to Buy. We continue to value the stock at an unchanged 25x Sep’26E EPS – 30 per cent discount to 360 One WAM.
Key risks: Slowdown in AUM growth, attrition (TL and client), etc.