Motilal Oswal's research report on IIFL Wealth
In its FY22 Annual Report, IIFLWAM outlined the emerging growth opportunities in the Wealth Management industry in India. The growth in the number of HNIs along with increasing wealth of existing HNIs unfolds a huge potential for growth ahead. The ensuing wealth transfer between generations will provide ample scope for existing players having preparedness to adopt technology at a fast pace. IIFLWAM will focus on expanding its customer base by adding INR50-250m networth customers. Currently majority of its customers have networth in excess of INR250m. The company has roped in BCG to take advise on the expansion strategy and is expected to launch an offering by the end of FY23 or early FY24. Also, IIFLWAM is looking to diversify its geographic presence from the top cities and metros to lower tier cities. For which, the company has identified 8-9 new cities and is looking for a low-cost expansion. In FY22, the company strengthened its leadership position in the AIF segment through the launch of several new products spread out during the entire fiscal. Also, in the MF space, the company decided to scale its IIFL-focused Equity Fund, wherein, strong performance attracted robust inflows. The core to IIFLWAM’s growth has been its ardent focus on the five Ps of wealth management: People, Proposition, Platform, Process, and Pricing. Within each of these elements, the management has brought in best industry practices with customer centricity.
Outlook
The stock currently trades at an attractive FY25E P/E of 18.5x, given its strong earnings CAGR of 16% over FY22-25E. We reiterate our Buy rating with a one-year TP of INR2,300/share.
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