Fundamental analysis of Nuvama | FII increasing stake ft. Mr. Akshay Jogani
Published: 2024-12-22
Status:
Available
|
Analyzed
Published: 2024-12-22
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
The proportion of Indian savings invested in capital markets, currently below 5%, is predicted to grow to 10-20% in the long term, mirroring global trends.
"if you think long term, then it can be at 5%, 10%, 15%, 20%. It has already happened globally. It is possible that this growth that has come, if we think long term, the growth can still continue for a long time."
Pending
The Indian wealth management industry's Assets Under Management (AUM) is expected to continue growing significantly, similar to its post-COVID surge from ₹[REDACTED] lakh crore to ₹7 lakh crore.
"Pre-Covid, the industry AUM was at ₹ lakh crore, today it is around 7 lakh crore. Can such growth happen in the future?"
Pending
Nawama Wealth's business growth is expected to remain strong, aided by positive market performance.
"Nama's wealth growth has been absolutely phenomenal, and obviously, the fact that the markets have done well has also helped the business."
Pending
Nawama Wealth's revenue is expected to grow proportionally with client asset growth, with a 20% asset increase potentially leading to a 20% revenue increase, assuming client retention.
"if you did nothing this year, except retain clients, and then the market grew by 20%, it's likely that your revenue would automatically grow by 20% because assets grew."
Pending
The number of millionaires in India is projected to increase significantly, with a substantial rise observed between 2019 and the present.
"The number of millionaires in the country. We are going up very fast. India had 107 and 102 billion years in 2019 and right now they have 270 crores."
Pending
Nawama Wealth is well-positioned to benefit from the increasing investment assets in tier-two and tier-three cities.
"So, I think they will be one of the Key Beneficiaries of Growth in Assets Outside of Metro and Tier 1 Cities"
Pending
Nawama Wealth has significantly expanded its Relationship Manager (RM) base, more than doubling it in the past four years.
"Nawama has almost doubled its RMs in the last four years, a strong number."
Pending
Nawama Wealth's asset servicing business is expected to continue its strong performance due to favorable capital market conditions, leading to larger market caps and fund sizes.
"And because capital markets have done well, market caps are large, fund sizes have increased, so this business has also given a very strong performance."
Pending
Nawama Wealth's Asset Management Company (AMC) business, though currently small, is predicted to experience rapid growth.
"Third, there's the AMC business, which is very small right now, but it will be able to grow fast."
Pending
There is a risk of yield compression in wealth management, where revenue growth may lag asset growth. For example, a 20% increase in Assets Under Management (AUM) might only result in an 18% revenue increase as client portfolios grow larger.
"The third risk is that there is a risk of yield compression. For example, if a customer of Rs 50 crore, if the NMA of a customer Managing that when it is 500, the customer will not give the same yield that we discussed. So, if on 50 crores, he was giving you revenue of maybe ₹1 lakh, then when he becomes 550 or 100, he will not give 50 lakhs but will probably give only 40 lakhs. The reason for this is that if your AVM grows by 20%, then it is possible that your revenue may grow by only 18%."
Pending
Nawama Wealth's business is significantly dependent on the performance of capital markets. A flat or negative market could lead to a decrease in their AUM growth and potentially a decline in AUM.
"One, this business is very capital market dependent in the near term. This means that if the capital market is not booming, then it is also possible that their AUM growth may not decrease. Now, if the capital market remains flat or negative for any year, then obviously their AUM will also decrease along with it."
Pending
The intensity of RM hiring is a key factor to monitor, reflecting increasing competition among wealth management firms.
"The third monitorable is whether competition from new wealth management firms is increasing and what is the resulting RM hiring intensity."
Pending