Buy Nuvama Wealth Management Ltd for the Target Rs. 7,800 by JM Financial Services Ltd
Nuvama Wealth Management reported a PAT of INR 2.64bn, +20% YoY, +4% QoQ, in line JMFe. Consol. revenues were flattish QoQ, up 15% YoY while Cost to Income Ratio (CIR) improved by (170bps QoQ, 140bps YoY) to 54.7%. Wealth management segments saw divergent trends. Private segment saw muted inflows, a reversal from 4QFY25. While the segment saw a decline in transactional revenues, ARR AUM and revenues were both up 9% QoQ. Meanwhile, Wealth segment was stable with strong inflows of 12% (annualised) and a steady revenue growth of (3% QoQ, 17% YoY). Capital markets businesses reported robust revenues and a CIR of 40% - revenue growth of (3% QoQ, 13% YoY) looks weak only due to a strong base
* Wealth management – Private and Wealth segments: AUM growth was expectedly robust in both Private and Wealth segments, growing 9% and 13% QoQ, respectively. The difference came from strong inflows into Wealth (INR 29bn, 12% annualised – against 8% in FY25) while Private segment saw muted inflows of INR 5.6bn (just 1% annualised, against 5% in FY25). However, on revenues (and consequently Cost to Income), while Private segment saw stable ARR (Annual Recurring Revenues) with weak TBR (Transaction and Broking Revenues), Wealth segment saw weak ARR fees compensated by strong lending income. Private segment saw a decline in transactional revenues, while ARR AUM and revenues were both up 9% QoQ. While costs declined sequentially, weak transactional revenues meant Cost-to-Income inched up by 280bps QoQ, was flattish YoY at 69% levels. The Wealth segment saw ARR revenue from MPIS moderate to INR 1.2bn (in line with 3QFY25 levels) while strong NII helped to maintain a decent (3% QoQ, 17% YoY) growth in revenues, driving Cost to Income to 66% levels, -320bps QoQ, -40bps YoY.
* Subdued growth in capital markets on very strong bases, both QoQ and YoY: IE & IB revenues were robust at INR 1.8bn, up 10% QoQ, down 10% YoY. YoY decline was on account of strong revenues booked in 1HFY25. Asset services revenues cooled off by 3% sequentially, however, YoY growth was robust at 46%. Commentary on this segment would be most keenly listened to in the concall. Cost to Income for the segment improved to 39.5%, down (60bps QoQ, 240bps YoY). Performance was robust, just the revenue growth was modest at (3% QoQ, 13% YoY) on strong bases.
* Valuation and view: Results were in line JMFe. We wait for concall to revise our estimates – we keenly await management commentary on asset services business and any guidance on flows into the Private and Wealth segment. The concall is scheduled at 2:00 PM tomorrow, 14th Aug’25.
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SEBI Registration Number is INM000010361
