Nuvama Wealth Management Limited Q1 FY27 Earnings Call Summary

Event Participants

Executives

2
Ashish Kehair (MD & CEO), Bharat (Group CFO)

Analysts

9
Abhijeet (Kotak Securities), Deepanjan Hu (Goldman Sachs), Lalit Mohan Deo (Equirus Securities), Madhukar (JPMorgan), Prayesh Jain (Motilal Oswal Financial Services), Sanidhya (Unicorn Assets), Sanketh Godha (Avendus Spark), Shrenik Mehta (IndoAplus Wealth), Sidharth Negandhi (CWC)

Financials & KPIs

Transcript incomplete - exact call date/time not available for summary.

Geographic & Segment Commentary

Nuvama Wealth: MPIS revenue grew 20% YoY with record net new money of ₹3,000+ crore; NPI assets rose 32% YoY to ₹43,000 crore. Tier-2+ cities now contribute >35% of MPIS. Added 40 net senior relationship managers; per-RM revenue jumped >25% YoY, supported by AI tools (Nuggets chatbot, RM Buddy voice assistant, AI customer profiler). Lending book crossed ₹5,000 crore (NII +12% QoQ).

Nuvama Private: ARR assets grew ~21% to ₹58,000 crore; managed-account net new money was ₹1,800 crore, while total ARR net flows were ₹1,000 crore post-cleanup of low-cost legacy mandates. Headcount up 11% YoY; 6-8 RMs added in Q1 across Mumbai, Chandigarh, Ahmedabad, Chennai. Launched "Pinnacle" for super-UHNI clients; RM productivity up 17-20% YoY.

Offshore (Dubai & Singapore): Dubai has broken even; Singapore expected by end of FY27. Offshore contributes 5-7% of revenue and is highly ROE-accretive as lending sits on partner books with zero capital usage. Management expects 15-20% of client portfolios to hold offshore assets over the next 3-4 years.

Asset Management: PRIME commercial real estate fund closed at ₹4,000 crore (vs ₹3,000 crore target) with 40% deployed across Chennai, Delhi, Pune; ₹4,000-5,000 crore second fund targeted for Q3. PE funds 1 and 2 returned 30% and 15% of capital respectively; Crossover 4 at ₹300-350 crore of a ₹700-1,000 crore target. Private credit fund launch set for mid-to-end Q3. MF license received; SIF license in process. Public markets saw redemptions in absolute-return and long-short funds on SIF tax arbitrage.

Asset Services: Revenue grew 20% QoQ and 34% YoY to ₹260 crore; average client assets back to Q1 FY26 levels after a large client loss. Moderation expected, but FY27 growth guided above 20-25%. Key initiatives: GIFT City single-stock futures, commodity collateral utilization (opening Mon/Wed/Fri expiries), and global custodian-local custodian tie-ups targeting long-only and hedge fund segments.

Capital Markets: Q1 saw only 8 IPOs (vs 15 in Q4) with fund raise down 60-65%; ECM was weak but fixed income was exceptionally strong, aided by FPI flows around G-Sec tax changes, with ₹15-20 crore of income considered non-repeatable. Secondary cash volumes improved; derivatives flat. New derivative regulations (STT, intra-day financing, bank guarantee collateral) under close monitoring.

Company-Specific & Strategic Commentary

Full-Platform Convergence: Management reiterated that standalone wealth/asset managers and capital-markets firms are converging toward full-platform models; independent wealth management and the affluent/HNI segment are emerging as large, underserved opportunity clusters.

AI & Technology Investments: Launched "Nuggets" (AI chatbot for RMs/EAMs), "RM Buddy" (voice-enabled AI assistant for lifecycle management) and an AI-based customer profiler (POC completed with 200 people). These drove >25% YoY per-RM revenue growth in Wealth.

Talent & RM Seniorization: Net RM additions of ~11% in Private over FY26; 40 senior RMs added in Wealth. Deliberate replacement of low-cost with senior RMs raised employee costs 17% YoY.

Advisory & Product Innovation: Launched Pinnacle for super-UHNI clients; ₹13,000 crore of ARR AUM is already advisory-based. Combined UHNI yield of 30-35 bps ex-NII seen as achievable under advisory economics with higher stickiness.

Capital Efficiency - SAR Plan: Shareholder-approved stock appreciation rights plan replaces ESOP — dilution is less than half of comparable ESOP (~3% over 5 years on a 7.5% pool, assuming 20% annual price appreciation); non-cash cost of ₹300-400 crore over 5 years with ~25% tax saving.

Structural Costs: New office lease renewal will incur an upfront charge under Ind AS 116, over and above guided OpEx growth; details to be shared at quarterly results.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Cost, Margins & Operating Leverage

• Question: Private cost-to-income is 70% in Q1 — when is the 60-62% medium-term target reached? What RM additions are planned? (Prayesh Jain)
• Answer: Q1 FY26 was 69% and Q1 FY27 is 70%, but FY26 full year was 66% and FY27 should be lower; variable incentives load in line with revenue growth. RM addition target is 15-16% annually; last 12 months added ~11% (15 net RMs). 60-62% remains the 3-year target. (Ashish Kehair)

Yield Drivers - Wealth & AMC

• Question: Wealth retention/yield fell from 90 bps to 85 bps — why? (Prayesh Jain)

• Answer: Insurance income is seasonally higher in Q4/Q1 at a lower denominator; equity mark-to-market compresses brokerage-based yields in rising markets. This is a denominator effect, not structural. (Ashish Kehair)

• Question: Private market AMC yields shot up — what changed? (Prayesh Jain)

• Answer: Fees on the venture debt fund were paused for three quarters when market conditions turned risky; Q1 restarted charging. This should sustain unless paused again. (Ashish Kehair)

Managed Account Mix & RTA Strategy

• Question: What is the asset mix in managed accounts/MPIS and how has it changed? (Deepanjan Hu)

• Answer: 30-35% equity, 65% non-equity (yield products spanning 7-8% to 18-20% returns, non-correlated to equity). Expect equity proportion to rise over the next two quarters as the global AI trade adjusts. (Ashish Kehair)

• Question: Will the RTA/trustee build-out target mutual funds? (Deepanjan Hu)

• Answer: No — banks have balance-sheet advantage for intraday financing in vanilla fund categories; Nuvama's play is in SIF/derivative-heavy categories where collateral efficiency matters. (Ashish Kehair)

SAR vs ESOP Dilution

• Question: How should we think about ESOP cost and dilution over the next 2-3 years? (Deepanjan Hu)
• Answer: Plan is stock appreciation rights, not ESOP — dilution is less than half (7.5% pool yields ~3% dilution assuming 20% annual price appreciation). Cost of ₹300-400 crore over 5 years for ₹1,500-2,000 crore of grants; non-cash with ~25% tax saving. (Ashish Kehair)

GIFT City, Commodities & Global Custodian Opportunity

• Question: What is the status of GIFT City derivatives and commodity margin-line opportunities? (Madhukar, JPMorgan)
• Answer: GIFT City is premature — volumes restricted to index, but international players seek hedging via STT-free single-stock futures. Commodities are moving faster and could become 15-20% of the equity market size for relevant clients. Global custodian-local custodian tie-ups (with 2-3 GCs lacking India presence) open long-only and hedge fund segments. (Ashish Kehair)

Advisory Progression & Flow Guidance

• Question: Is advisory replacing trail revenue, and will the Wealth segment drive incremental flows? (Sanketh Godha)
• Answer: The cleanup is of corporate-treasury-type mandates, not UHNI; ₹13,000 crore of ₹58,500 crore ARR is already advisory. Combined UHNI yield of 30-35 bps ex-NII is achievable via advisory with higher stickiness. FY27 flow guidance: ₹10,000-12,000 crore each for Wealth and Private (₹20,000-24,000 crore combined), AMC ₹3,500-5,500 crore. (Ashish Kehair)

Lending Book Margins

• Question: What are steady-state lending margins? (Lalit Mohan Deo)
• Answer: Current period-end margins are 3.7-3.8%; steady state is 30-40 bps higher. MLD borrowings (25% of book) with hedging save ~50 bps of cost, causing quarterly swings. (Ashish Kehair)

Transactional Income & Competitive Positioning

• Question: Are there one-offs in Q1 transactional income? (Sidharth Negandhi)

• Answer: 70-80% of transactional income is business-as-usual (equity broking, fixed income, MLDs); 20% is opportunistic. FY26 ran at ₹300-305 crore; FY27 should reach ₹350-360 crore. (Ashish Kehair)

• Question: Are you competing with technology-first brokers targeting mid/lower-ticket wealth? (Sanidhya, Unicorn Assets)

• Answer: Different DNA — clients with ₹10-20 crore needs require complex products and human advisory; technology-first models suit simpler, smaller-ticket products. Nuvama is present in 65-70 cities directly and 400-450 pin codes via external wealth managers. (Ashish Kehair)

Wallet Share & Advisory Threshold

• Question: Where do you stand on client and issuer wallet share? (Abhijeet, Kotak Securities)
• Answer: Solution capability is ~100% on both client and domestic issuer sides; client wallet share is ~40-50% (UHNI clients typically keep two core advisors). Advisory makes sense above ₹500 crore; below ₹100-200 crore it does not; a mix of advisory and transactional models will persist. (Ashish Kehair)

Key Takeaway

Nuvama Wealth delivered a record Q1 FY27, with client assets crossing ₹5 lakh crore to ₹5,36,000 crore, revenue of ₹909 crore (+18% YoY) and operating PAT of ₹306 crore (+16% YoY), sustaining ROE near 30%. Growth was broad-based: Wealth NPI assets rose 32% YoY to ₹43,000 crore with ₹3,000+ crore of record net new money, Private ARR assets grew 21% to ₹58,000 crore, and Asset Services jumped 34% YoY to ₹260 crore despite management cautioning moderation. Strategic focus remains on seniorized RM hiring (11% force growth in Private), AI-driven productivity tools (>25% per-RM revenue jump in Wealth), and new AMC verticals — commercial real estate (PRIME fund closed at ₹4,000 crore), private credit (Q3 launch) and SIF post-MF license. Management guided to FY27 wealth/private flows of ₹20,000-24,000 crore, asset services growth above 20-25%, cost-to-income near 55%, and an AMC peak loss of ₹35-40 crore before breakeven. Watch items include derivative regulations, ECM recovery, and non-repeatable fixed-income gains as the company positions for operating leverage in FY28.