Global brokerage Bernstein decided to initiate coverage on wealth managers in India, even though the financial services quipped that 'wealth management in an emerging market may be an oxymoron.' However, as India's uber-rich boast of $2.7 trillion in wealth, the rising affluence poses as a multi-year scale-up opportunity for organized wealth managers.
Bernstein, therefore, initiated coverage on key wealth management firms. It rated Nuvama Wealth and 360 One Wealth as 'outperform' with target prices of Rs 9,790 and Rs 1,410 respectively. This implies a potential upsides of 26 percent and 23 percent.
The brokerage rated Anand Rathi Wealth as 'market-perform' with a target price of Rs 2,580, which indicated a slight downside of 2 percent.
The brokerage noted that firms such as Nuvama and 360 One are well-placed to benefit from the rising number of high-net-worth and ultra-high-net-worth individuals in India. This growth is backed by robust tech platforms, unique advisory approaches, and a widening presence in tier-1 and tier-2 cities.
Although the sector continues to grapple with issues like client retention, fee compression, and global competition, Bernstein believes these companies are poised to capture a significant share of the market over the next ten years, driven by increasing demand for professional financial advice and diversified investment options. As a result, the broking house is positive on the entire wealth management sector.
Additionally, the brokerage noted that the rich will continue to become richer. According to its calculations, Bernstein believes that 3 million households hold around $2.7 trillion in liquid financial wealth.
"With rising return expectations and product complexity, the demand for professional advice is growing," said Bernstein. The brokerage believes that specialised wealth managers will continue to see a long growth runaway, and benefit from it strongly.
According to the brokerage, the wealth managers in India can grow from an AUM (assets under management) of $300 billion to over $1.6 trillion over the next few years, which indicates a CAGR of 18 percent.
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