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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 y-o-y and it beat our estimates. Capital markets stole the show with a 90 per cent and 98 per cent y-o-y growth in AUM and revenues, respectively.
The recent equity market rule changes or even a 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.
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