At a Glance

Nuvama Wealth has grown profits 58% YoY, boasts a 50%+ OPM, and serves 1.2 million rich Indians. But with 62.8% promoter pledging, it’s giving serious NBFC anxiety. Is this the next Angel One, or a debt-fueled mirage?

🏦 What Does Nuvama Even Do?

• Born in 1993 as part of Edelweiss, rebranded in 2023 as Nuvama Wealth Management Ltd.
• Basically your stock market sutradhar for the rich: broking, research, PMS, AIFs, mutual funds, trading, custody – you name it.
• Key audience: India’s affluent, HNI and UHNI segments.
• 1.2 million+ clients and 3,600+ ultra-rich families are under their management umbrella.
• It’s not a retail discount broker like Zerodha or Upstox – this one wears a Rolex.

🧠 Core businesses:

• Equity and derivatives broking
• Wealth advisory & discretionary portfolio management
• Asset management via AIFs and PMS
• Custody and clearing services
• IPO and debt distribution
• Investment banking (via merchant banker registration)

💰 Financials That Even Rakesh Jhunjhunwala Would Raise an Eyebrow At

🧾 Takeaways:

• Profit tripled in two years.
• Operating leverage kicking in hard: revenue up 87%, profit up 223% in two years.
• 50%+ OPM is unheard of in stockbroking – looks more like a software company than a financial one.

🕵️ But wait…

• Cash flows? 👎
  • Operating cash flow for FY25 is -₹371 Cr
  • FY24 was worse: -₹1,658 Cr
  • This is a pattern: every year negative cash from ops. Yikes.

🏦 Promoter Holding = Okay. But Pledging = 👀

If over half of the promoter’s skin in the game is pawned off, does it even count as skin anymore?

🎯 Interpretation:

• High FII interest = market likes it.
• But promoter pledging is a massive red flag – either taking leverage to juice returns OR covering another mess.

🧮 Valuation Check: Angel One vs 360 One vs Nuvama

🤔 So Nuvama has:

• Higher margins than Angel
• Lower P/E than 360 One
• Way better ROE than Motilal

🧠 But it’s not a direct apples-to-apples:

• Angel = Retail heavy (Zerodha clone + margin lending)
• 360 One = Pure wealth management + asset light
• Nuvama = A Frankenstein mix of both

🧨 Risks Hiding in the Footnotes

1. Pledging Bomb:
   • 62.8% promoter pledging is excessive.
   • If stock falls, lenders panic, margin calls start, share dump begins.
2. Negative Cash Flow:
   • Every year, it bleeds operating cash.
   • Either client float is inefficient, or working capital cycles are ugly.
3. Borrowing Spree:
   • FY20: ₹1,287 Cr
   • FY25: ₹7,839 Cr 😱
   • They are building scale, sure. But funded by 7x jump in debt.
4. Stock up 43% YoY:
   • So retail is getting bullish. But institutions might know more. Watch that DII/FII shift closely.

📈 Fair Value Range

Let’s assume FY26 EPS grows 20% to ₹85.

📊 Applying a P/E range of 22x to 28x (same bracket as Angel One and 360 ONE):

• Lower FV = ₹85 x 22 = ₹1,870
• Upper FV = ₹85 x 28 = ₹2,380

But wait… that’s EPS. The stock is already at ₹7,272 – we need to reverse.

🧮 Current EPS = ₹274 (FY25)

So current P/E = 26.5x → aligned with growth.

📌 Valuation range assuming steady 25-30% profit CAGR:

🎯 Fair Value Range = ₹5,580 to ₹9,250

🧠 Verdict: Real Growth or Leveraged Mirage?

✅ Why we like it:

• 50%+ margins = pricing power
• High ROE = efficient capital use
• Wealth + broking + PMS = sticky, long-term clients

🚫 What scares us:

• Promoter pledging
• Negative cash flows for 5 years straight
• Aggressive debt build-up

🤹‍♂️ In other words – if the bull market holds, Nuvama will look like a genius. But if there’s a shakeout, the pledging could spark a nasty correction.

🏁 Final Edu Take

“When the tide goes out, you see who’s swimming naked. Nuvama’s wearing a tux, but it’s mortgaged.”

📉 Worth tracking, not chasing. Let Q1 FY26 numbers confirm the earnings durability — and for god’s sake, someone ask the promoter to stop pledging everything except the office chair.

✍️ Written by Prashant | 📅 June 19, 2025

Tags: Nuvama Wealth, stock broking, wealth management, financial services, pledged shares, high ROE, EduInvesting, Angel One, 360 One, PMS, HNI investing