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Nuvama Private and capital market revenues drive a beat on PAT

* Nuvama Wealth’s (NUVAMA) 4QFY25 operating revenue grew 30% YoY to INR7.7b (11% beat), mainly due to higher-than-expected revenue from Nuvama Private (20% beat) and its capital market segment (13% beat). However, the AMC revenue declined 23% YoY (27% lower than est.). For FY25, operating revenue grew 41% YoY to INR29b.

* Under the Nuvama Wealth segment, the revenue was up 17% YoY (6% beat) to INR2.15b in 4QFY25, driven by 50% YoY growth in Managed Products and Investment Solutions (MIPS), while the average clients assets grew 22% YoY to INR947b.

* Under Nuvama Private, the total revenue grew by 24% YoY in 4QFY25 (20% beat), driven by 33% YoY growth in transactional income. The average client assets grew by 16% YoY to INR1.98t.

* Under the asset management business, the revenue declined 23% YoY (27% miss) to INR132m in 4QFY25. The average fee paying AUM jumped 89% YoY, while the net new money declined 43% YoY in 4QFY25.

* Total operating expenses grew 22% YoY to INR4.3b (12% above est.), driven by 22% YoY growth in employee expenses and 20% YoY growth in other opex. The cost-to-income ratio declined YoY to 56.4% in 4QFY25 vs. 60% in 4QFY24 (our est. of 56.1%).

* PAT grew 41% YoY to INR2.6b (15% beat driven by better than expected revenues). For FY25, PAT grew 65% YoY to INR9.9b.

* In 4QFY25, the closing AUM for the wealth business grew 18% YoY to INR2.9t, and for the asset management business, it grew 62% YoY to INR113b.

* The Board has approved an interim dividend of INR69/share.

Valuation and view

* We expect Nuvama to deliver a CAGR of 18%/15%/13% in AAUM/revenue/ PAT over FY25-27, fueled by growing wealth management and capital markets businesses. We reiterate our BUY rating on Nuvama with a TP of INR7,800, based on 22x Mar’27E EPS.

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