Buy IIFL Wealth; target of Rs 2300: Motilal Oswal

Motilal Oswal's research report on IIFL Wealth

IIFLWAM’s PAT came in at INR1.7b, which is 12% lower than our estimates of INR1.95b owing to a negative INR50m hit on forex of offshore assets and lower MTM gains on treasury book. OPEX was in line with our forecast at INR1.9b and registered a 16% YoY decline owing to a 23% YoY reduction in employee costs. Resultantly, the cost/income ratio contracted 1,381bp YoY to 44.9% (est. 44.8%). Total AUM (ex-custody assets) rose 4.7% YoY to INR2.75t with continued focus on scaling up ARR assets. ARR AUM grew 19.8% YoY to INR1.66t. ARR net flows were INR104b in 3QFY23 while total net flows stood at INR60b. Revenue/operating profit/PAT rose 20%/50%/22% YoY in 9MFY23. The Board has approved: a) a dividend of INR17/share, b) 1:1 split, and c) 1:1 bonus.

Outlook

Our EPS estimates remain largely unchanged for FY24/FY25. We retain our BUY rating with a one-year TP of INR2,300 (based on 25x Sep’24E EPS).

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