Nuvama, 360 One WAM secures ‘buy’ rating from Jefferies

Global investment advisory firm Jefferies hasinitiated coverage on two wealth managers — Nuvama Wealth and 360 One WAM . The brokerage firm’s report stated that they are well-placed to ride on the country’s economic growth and financialisation of savings, especially into capital markets. The brokerage firm has initiated ‘buy’ rating on 360 One WAM Ltd and Nuvama Wealth Management, increasing the target price to ₹900 and ₹6,000, respectively.

“Leading players will benefit from strong inflows and operating efficiencies to deliver 20-22 percent profit CAGR over FY24-27. Rise in share of trail fees (70-75 percent by FY27) improves earning visibility and supports value re-rating,” Jefferies said in its report.

Nuvama stock hit a 52-week high on April 12, at ₹5,475 on the NSE. On Monday’s trade, the stock declined 2.48 per cent to trade at ₹5,280.05. The stock of 360 One WAM closed at ₹739.25 on the NSE, down 1.26 per cent. Meanwhile, Anand Rathi Wealth stock hit a 52-week high on April 15, 2024, at ₹4,211. The stock closed at ₹4,200, higher by 4.76 per cent on Monday.

Jefferies said Nuvama management is investing in wealth franchise build-out (RM network to double over FY23-27). “We use DDM and arrive at a PT of ₹6,000 (implied P/E of 24x Jun-26). Nuvama’s valuation discount is driven by a lower mix of wealth/ARR, and we expect the steady improvement in business mix to drive re-rating for the stock over the medium-term, however, near-term upside can be limited after the recent run-up.”

For 360 ONE, Jefferies believes that the network expansion and growing client vintage should drive about 25 per cent CAGR in active AUM of wealth business. “AMC is entering a PE fundraising cycle as large maturities approach and should deliver a about 20 per cent AUM CAGR.”

Despite some pressure on fees, operational leverage will drive a consol. C/I ratio improvement of over 400bps over next 3 years and deliver PBT CAGR of about 22 per cent. We value the firm using DDM and arrive at a PT of ₹900 (+26 per cent upside, implied P/E of 28x Jun-26).”

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