Synopsis:
Nuvama Wealth stock is in focus as Motilal Oswal initiated a Buy call with an upside potential of 28 percent, citing strong performance in the first quarter with temporary disturbances from the Jane Street ban.
The shares of this leading wealth management company are in focus after Motilal Oswal initiated a ‘Buy’ call on the stock, with a strong upside potential of 28 percent. In this article, we will delve into the details that led the brokerage to maintain its bullish view.
With a market capitalization of Rs 24,696 crores, the shares of Nuvama Wealth Management Ltd are currently trading at Rs 6,854 per share, down by 19.5 percent from its 52-week high of Rs 8,510 per share. Over the past six months, the stock has delivered an impressive return of 22 percent.
Analyst Comments
Leading brokerage house Motilal Oswal has initiated a Buy call on Nuvama Wealth and assigned a target price of Rs 8,750 per share, signaling an upside potential of 28 percent from its previous closing price of Rs 6,854.50 per share.
The brokerage cited that Nuvama Wealth has reported a solid performance for the first quarter of FY26, with operating revenue climbing 15 percent year-on-year to reach Rs 770 crore. This growth was fueled by an impressive 18 percent increase in wealth management and a whopping 46 percent rise in asset services.
The profit after tax (PAT) also saw a 19 percent YoY increase, hitting Rs 260 crore, while margins improved to 34.3 percent.
Looking ahead, management is optimistic, projecting around 30 percent growth in wealth and approximately 26-27 percent in private business for FY26. However, they did lower earnings estimates for FY26-27 by 9 percent due to the impact of the Jane Street trading ban.
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Segment Highlights
Wealth revenue surged 17 percent YoY to Rs 220 crore, primarily driven by a remarkable 59 percent growth in Managed Products & Investment Solutions, which now makes up 54 percent of the total mix. Net flows reached Rs 2,870 crore, with 79 percent coming from MPIS, marking the highest quarterly inflows ever recorded.
Private business revenue also rose by 19 percent YoY, bolstered by strong annual recurring revenue (ARR) growth, which accounts for about 66 percent of the mix, while client assets increased by 15 percent YoY.
On the asset services front, revenue jumped 46 percent YoY to Rs 190 crore, mainly because of robust international demand, and AMC revenue grew by 23 percent YoY. Although capital markets revenue dipped 10 percent YoY due to a one-time M&A base effect, it did show improvement sequentially.
Nuvama is also branching out into value-added services, has applied for a mutual fund license, and is hopeful for a recovery following the Jane Street ban. Motilal Oswal anticipates a 14 percent revenue and 15 percent profit after tax (PAT) compound annual growth rate (CAGR) over FY25-27.
The stock delivered an impressive ROE and ROCE of 30.89 percent and 20.41 percent respectively, and is currently trading at a P/E of 24x as compared to its industry average of 15.43x.
Nuvama Wealth Management Limited is all about wealth management, asset management, and capital markets. They provide a range of services, including debt advisory, clearing, portfolio management, and investment advisory. Additionally, the company is involved in institutional broking, distributing financial products, lending against securities, and managing alternative investment funds.
Written by Satyajeet Mukherjee
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