Buy Nuvama Wealth; target of Rs 8600: Motilal Oswal

Motilal Oswal's research report on Nuvama Wealth

Nuvama Wealth’s (NUVAMA) 4QFY25 operating revenue grew 30% YoY to INR7.7b (11% beat), mainly fueled by 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. 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) in 4QFY25. For FY25, PAT rose 65% YoY to INR9.9b.

Outlook

We also raise our cost-to-income ratio estimates for the wealth segments as the company continues to invest in capacity creation in both the wealth management segments. We expect an 18%/19% revenue/PAT CAGR for FY25-27. Reiterate BUY with a TP of INR8,600 (premised on 22x FY27E).

For all recommendations report, click here