IGI Logo

Robust performance across segments

• Nuvama Wealth’s (NUVAMA) 1QFY26 operating revenue grew 15% YoY to INR7.7b (in-line), fueled by 18%/46% growth in the wealth management/asset services businesses.
• Total operating expenses increased 13% YoY to INR4.2b (7% below est. mainly due to a 17% decline in other expenses), driven by a 13% YoY growth in employee expenses and 11% YoY growth in other opex. CIR declined YoY to 54.7% from 56% in 1QFY25 and 56.4% in 4QFY25 (our est. of 56.2%).
• PAT grew 19% YoY to INR2.6b (in line) in 1QFY26. PAT margin came in at 34.3% in 1QFY26 vs. 33.1% in 1QFY25 and 33.1% in 4QFY25.
• Management expects ~30% growth in the Wealth business and ~26-27% growth in the Private business for FY26 on the 1Q base, driven by the current flow run rate.
• We have cut our earnings estimates for FY26E and FY27 by 9% each to factor in the volume impact from the ban on Jane Street’s trading. We expect a 14%/15% revenue/PAT CAGR for FY25-27. Reiterate BUY rating on the stock with a TP of INR8,750 (based on SOTP valuations).

Robust flows in MPIS and ARR segments driving overall growth Nuvama Wealth

• Revenue rose 17% YoY (in line) to INR2.2b, driven by 59% YoY growth in Managed Products and Investment Solutions (MPIS), constituting ~54% of the mix, while average client assets grew 20% YoY to INR997b, led by MPIS net new money and MTM gains on other assets.
• Net flows stood strong at INR28.7b, with ~79% coming from MPIS (highest ever quarterly flows)—driven by sustained healthy inflows in annuity products.
• The company currently has an RM base of ~1.2k, with plans to expand to ~3-4k over the next 3-4 years.
• CIR for the quarter was ~66%, stable YoY, with management guiding for a 100bp reduction from current levels in FY26.
• Retention declined YoY to 89bp from 92bp in 1QFY25.

Nuvama Private

• Revenue grew 19% YoY (13% miss) to INR1.6b, driven by ~25% YoY growth of annual recurring revenue (~66% of the mix), while the transactional segment reported a growth of 9% in 1QFY26.
• Average client assets rose 15% YoY, led by strong growth of 30% YoY in ARR assets and MTM. Of the total clients, one-third have an AUM exceeding INR100m, while ~50-60% have an AUM above INR50m.
• CIR remained stable at 69% YoY despite an increase in RMs to 137 in 1QFY26 from ~118 in 1QFY25; management aims to reduce CIR to 65% from current levels in FY26. ? Retention declined YoY to 87bp from 91bp in 1QFY25

Nuvama AMC

• Revenue increased 23% YoY (15% beat) to INR186m, led by 37% YoY growth in the management fee (driven by healthy growth in public markets and CRE strategy).
• Fee-paying AUM now represents 93% of closing AUM. Average fee-paying AUM surged 85% YoY, while net new money fell 101% YoY. Net flows were subdued due to a slowdown in public market flows, but management expects a ramp-up as flows have begun to recover.
• Under the private markets, the focus will now be on the deployment of the funds.
• The company is planning to launch a private credit product by 3QFY26.

Nuvama Capital Markets

• Capital Markets revenue fell 10% YoY to INR1.8b, mainly due to a large one-time M&A transaction in 1QFY25; excluding this, performance was on an uptrend, in line with the company’s strategy. Sequentially, revenue rose 10%, driven by improved market momentum.
• The Asset Services business grew 46% YoY to INR1.9b, driven by the scale-up of existing clients as well as the addition of new ones across the international and domestic segments. The International segment constitutes ~70-75% of the overall revenue.
• CIR for the segment stood at ~40%, with asset services at 30-32% and Capital markets business at ~50-55%. Management expects an uptrend in the CIR.
• Average client assets in the asset services segment grew 26% YoY to INR1.2t, driven by 44% YoY growth in assets under custody.
• Retentions on average assets under clearing improved to 2.1% vs. 1.4% in 1QFY25 and 2% in 4QFY25. If the markets are expected to decline further, management guides for a decrease of up to 2% on the higher side.
• Wealth management contributed 49% to the revenue mix, followed by Capital Markets and Asset Services (49%) and Asset Management (2%).
• Employee expenses grew 13% YoY to INR3.1b (with fixed costs rising 17% YoY, mainly due to new hiring on the distribution side), while other opex grew 11% YoY to INR1.1b. Management guides for a 6-7% YoY rise for FY26. CIR for 1QFY26 improved to 55% from 56% in 1QFY25, and management has guided to maintain these levels.
• The closing client assets grew 19% YoY to INR4.6t, with Wealth accounting for a 70% share, Asset Services accounting for 28%, and the remaining held by asset management.

Highlights from the management commentary

• Under Asset Services, on the domestic front, the company plans to introduce two new value-added services—RTA and Trusteeship—for AIF and PMS clients, with board approvals in place and implementation expected within six months.
• Regarding the Jane Street trading ban, management anticipates a 2Q volume impact, though normalization is anticipated through a strong new-client pipeline and scaling from existing clients, even if Jane Street remains inactive.
• The company has applied for an MF license for SIF, with the first SEBI inspection round completed and approvals expected in 3-4 months; the team and strategy are ready to ramp up operations once the license is granted.

Valuation and view

We have cut our earnings estimates for FY26E and FY27E by 9% each to factor in the volume impact from the ban on Jane Street’s trading. Management expects 2Q volumes to be impacted; however, it anticipates a recovery thereafter, driven by a strong new-client pipeline and scaling from existing clients, even if Jane Street remains inactive. We expect a 14%/15% revenue/PAT CAGR for FY25-27E. Reiterate BUY rating on the stock with a TP of INR8,750 (based on SOTP valuations).

Highlights from the management commentary

Nuvama Wealth

• Revenue increased 17% YoY, driven by a strong 59% YoY growth in the MPIS segment, (~54% of the revenue mix), aligning with the company’s strategy.
• MPIS segment’s revenue declined 7% QoQ due to seasonal softness in insurance volumes, which are typically stronger in 4Q. Management expects volumes to rebound in the coming quarters.
• Client assets rose 20% YoY, supported by net new money from MPIS and markto-market gains on other assets.
• Net flows from MPIS remained robust at INR22.8b (~77% of total flows), the highest ever quarterly flows, aided by sustained strength in annuity products.
• Management projects ~30% overall growth for FY26 on the 1Q base, backed by current flow run rate and an expected ~50-60% YoY increase in annuity income for FY26.
• Wealth business priorities: 1) delivering holistic asset allocation resilient to market volatility, 2) expanding the MPIS book (~77% of flows), 3) continuing tech investments to support a large RM, external wealth manager, and client base (portfolio solutions tool, revamped website, RM/EWM dashboards, unified product investment journey), and 4) improving RM productivity as their vintage increases.
• RM base currently stands at ~1.2k, with a target of ~3-4k over the next 3-4 years.
• The multi-product platform continues to attract healthy inflows across asset classes, aided by ongoing investments in talent and technology.
• Management anticipates a 100bp reduction in CIR from ~66% currently for FY26.

Nuvama Private

• Revenue grew 19% YoY, led by ~25% growth in the ARR segment (~66% of revenue), while the transactional segment posted 9% growth in 1QFY26.
• Transactional revenue dropped 40% QoQ due to weak market sentiment from global uncertainty and tariff concerns.
• Management expects ~26-27% growth for FY26 on the 1Q base, based on the current flows run rate.
• CIR remained steady at 69% YoY despite an increase in RMs to 137 in 1QFY26 from ~118 in 1QFY25; the company targets to reduce CIR to 65% for FY26.
• Client assets increased 17% YoY, driven by a 25% YoY rise in ARR assets and mark-to-market gains.
• Around one-third of clients have AUM above INR100m, and ~50-60% have AUM above INR50m.
• The focus is on strengthening the lending segment, with growth expected in upcoming quarters.

Asset Management

• Revenue rose 37% YoY, supported by strong performance in public markets and the Commercial Real Estate strategy.
• Closing AUM increased 54% YoY, driven by: 1) 93% YoY growth in Public Markets AUM and 2) Commercial Real Estate (completion of its first deployment).
• The company recently executed the second phase of a real estate fund deal in Chennai; it expects a significant improvement in the flow run rate.
• Net flows were subdued during the quarter due to a slowdown in public market flows, though activity has started to pick up.
• In private markets, the focus is on fund deployment. Nuvama Wealth 15 August 2025 5
• It plans to launch a private credit product by 3QFY26.

Asset Services

• Revenue advanced 46% YoY, driven by scaling up existing clients and adding new ones in both international and domestic markets.
• Revenue mix: international ~70–75%, domestic ~25–30%.
• International business has >100-150 clients, with the top 10 contributing ~30- 35% of international revenue.
• The pipeline remains strong in both international and domestic segments; it currently serves 250+ clients (FII, AIF, PMS).
• Domestic plans include adding two value-added services for AIF and PMS clients—RTA services and Trusteeship services. Board approvals have been secured, and implementation is expected within six months.
• Regarding the ban on Jane Street’s market activity, management expects a 2Q volume impact, but strong client pipelines and scaling from existing clients should normalize volumes, even if Jane Street remains inactive.
• Retention remained high at 2.1% despite market volatility; management expects this to decline to ~2% in a deeper market correction.
• CIR was ~30-32% during the quarter.

Institutional Business

• The business witnessed steady growth from the previous quarter, supported by improved market sentiment and continued client engagement.
• Capital Markets’ 1Q revenue declined 10% YoY due to a large one-time M&A transaction in 1QFY25; excluding this, performance was on an uptrend, in line with strategy.
• Sequentially, revenue grew 10%, driven by a better market momentum.
• Fixed income markets (IB segment) continue to perform well, benefiting from stronger client coverage and higher volumes.
• CIR stood at ~50-55% during the quarter.

Financials

• Net debt increased ~INR10b QoQ, with ~50% linked to the loan book, ~30% to working capital, and the remainder to client facilitation.
• Management expects CIR to stay at around ~55%, factoring in: 1) a reduction in Private segment CIR to 65% from 69%, 2) a 100bp decline in Wealth segment CIR, and 3) some increase in Capital Markets CIR, offsetting these improvements to normal levels.
• Overall, costs rose 13% YoY due to provisions for increments and distribution capacity expansion.
• Other opex fell sequentially as 4Q included one-offs like conference costs, offsites, and a CNBC deal pay-out. Management expects a ~7-8% increase in FY26 vs the last full year.

Others

• For SIF, the company has applied for an MF license. The first SEBI inspection round has been completed, with approvals expected in 3-4 months.
• The team and strategy are ready with operations to ramp up once the license is granted.

For More Research Reports : Click Here 

For More Motilal Oswal Securities Ltd Disclaimer
http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html
SEBI Registration number is INH000000412