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
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.