An analyst’s target price is a forecasted future value for a stock, reflecting the analyst’s perception of a fair market value. This projection considers the company’s past performance, as well as its future objectives and strategic plans. Conversely, a lower target price suggests the analyst’s belief that the stock is expected to decrease in value.
According to Jefferies’ analysis, Indian Wealth Managers (IWMs) are strategically positioned to capitalize on economic expansion and the increasing trend of channeling savings into capital markets.
Key industry participants are poised to experience substantial inflows and operational enhancements, enabling them to achieve a compound annual growth rate (CAGR) of 20-22 percent in profits from fiscal year 2024 to 2027. The projected increase in trail fees’ share (expected to reach 70-75 percent by fiscal year 2027) enhances earnings predictability and reinforces the potential for valuation upgrades.
Here are two wealth Management stocks recommended by brokerage firms as having potential with an upside of up to 22%
Nuvama Wealth Management Ltd
Nuvama Wealth Management Limited (formerly known as Edelweiss Securities Limited) is a wealth management company based in Mumbai, India, offering a range of financial services including investment advisory, estate planning, asset management services, investment management, lending, and broking services for individuals, institutions, senior executives, professional investors, and family offices.
On wednesday, Nuvama Wealth Management Ltd shares were trading at ₹5,136, down 1.19 percent from the previous close on the National Stock Exchange. The company has a market capitalization of ₹18,607 crore.
The company’s shares have experienced a 135 percent increase over the past six months and a 101 percent increase over the past 12 months.
Nuvama Wealth Management Ltd. witnessed a significant growth in revenues, with a
45 percent year-on-year increase from ₹579 crores in Q3FY23 to ₹841 crores in Q3FY24. Additionally, the company experienced a remarkable surge in net profit, rising by 103 percent from ₹87 crores to ₹176 crores during the same period.
Jefferies gave a ‘buy’ rating on Nuvama Wealth Management Ltd, with a target price of ₹6,000 per share, representing an upside potential of up to 17% from Wednesday’s trading price of ₹5,136 per share.
The Jefferies report indicates that Nuvama Wealth contributes roughly 60 percent of revenues, with Ultra High Net Worth Individuals (UHNIs) contributing 25 percent, High Net Worth Individuals (HNIs) 35 percent, Investment Banking (IB) 22 percent, and custody Services 18 percent, alongside a growing AMC.
Nuvama’s management is actively investing in expanding the wealth franchise, aiming to double the network of relationship managers (RMs) by FY27. They expect growth in AUM and Profit Before Tax (PBT) at 22 percent and 20 percent, respectively, from FY24 to FY27. However, the high base of investment banking (IB) may have a dampening effect on consolidated earnings, with a projected 17 percent Compound Annual Growth Rate (CAGR), as per Jefferies analysis.
360 ONE WAM Ltd
360 One Wam Ltd is one of the largest private wealth management firms in India. The company mainly acts as a wealth manager and provides services relating to financial product distribution, advisory, and portfolio management services.
On Wednesday, 360 One Wam Ltd shares were trading at ₹738, up 2.55 percent from the previous close on the National Stock Exchange. The company has a market capitalization of ₹25,835 crore.
In the last six months, the company’s shares have surged by 40 percent, and over the past year, they have climbed by 67 percent.
360 ONE WAM Ltd. witnessed a 25 percent year-on-year revenue growth, rising from ₹517 crores in Q3 FY23 to ₹648 crores in Q3 FY24. Meanwhile, its net profit saw a 12 percent increase, advancing from ₹172 crores to ₹192 crore.
Jefferies gave a ‘buy’ rating on 360 One Wam Ltd, with a target price of ₹900 per share, representing an upside potential of up to 22% from Wednesday’s trading price of ₹ 738 per share.
According to Jefferies, 360 ONE holds the position as the leading wealth manager for ultra-high-net-worth individuals (UHNIs) and ranks as a premier asset manager in private markets. Jefferies projects approximately a 25 percent annual growth in active assets under management (AUM) for the wealth business from FY24 to FY27, driven by network expansion and a growing client base.
As the company enters a private equity fundraising phase with significant upcoming maturities, Jefferies India anticipates approximately 20 percent annual growth in Assets Under Management (AUM). Despite facing some fee pressure, the forecast suggests that improvements in operational efficiency will reduce the consolidated cost-to-income ratio by over 400 basis points within the next three years. This is projected to result in an annual growth in Profit Before Tax (PBT) of around 22 percent.
Written by Omkar Chitnis
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
