Target: ₹2,200

CMP: ₹1,792.10

IIFL Wealth Management is on the verge of transitioning to earning majority of its revenue from a trail-based model as compared to a transaction-based one. It embarked on this journey from FY20 and had targeted to complete the same in three-to-four years. With a supportive market and conscious efforts, the transition is expected to be completed ahead of schedule, with benefits reaped from FY23 onwards.

Its core focus segment - UHNI (clients with a net worth of over Rs 25 crore) -is expected to see rapid grow, with: major monetisation of stakes by the founders of startups; the next generation of UHNIs preferring organized Wealth Management platforms; and interest rate remaining low.

Amid this, IIFLWAM plans to: enter into eight cities where it sees large opportunities, and capture a significant market share, leveraging its relationships (via pre-IPO investments or other products) with new age startup founders.

We expect a significant improvement in profitability on the back of a marked reduction in employee costs, due to: completion of the soft landing needed to retain RMs during this business transition, and one-time payments in FY22 to attract new talent.

We maintain our Buy rating with a one-year TP of ₹2,200/share