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    Buy IIFL Wealth Management, target price Rs 1,310: ICICI Securities

    Synopsis

    According to the brokerage, mitigating risk on credit funds and stress-testing real estate funds will be critical.

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    ICICI Securities has given a buy rating to IIFL Wealth Management with a target price of Rs 1,310. The share price moved up by 3.36 per cent from its previous close of Rs 967.45. The last traded stock price is Rs 999.95.
    The brokerage says IIFL Wealth & Asset Management’s Q4FY20 earnings reflect a focus on transition towards more sustainable recurring revenues (up 14 per cent year on year / 2 per cent quarter on quarter) and strong momentum in IIFL One (up 10 per cent quarter on quarter). Higher transaction revenues on structured bonds and syndication (up 40 per cent quarter on quarter) aided 16 per cent quarter on quarter growth in operating revenues. This was nullified by month to month losses of Rs 790 million on alternate / real estate funds and higher employee variable payout (Rs 520 million) leading to breakeven earnings (zero PAT).

    Investment Rationale

    According to the brokerage, mitigating risk on credit funds and stress-testing real estate funds will be critical. Transitioning year (FY20) points towards continued build-up of recurring revenue based business model enabling more predictable earnings. Cost controls, reduction in non-sponsor investments and anticipated lower MTM loss will help push operating RoEs to high teens. The brokerage expects AUMs to maintain 18-20 per cent growth and earnings to grow at more than 25 per cent. The brokerage reinitiated coverage with a buy and a revised target price of Rs 1,310 implying 30 times FY22E EPS (earlier the target price was Rs 1,636).

    Financials


    For the quarter ended March 31, 2020, the company reported consolidated sales of Rs 431.62 crore, down -12.28 per cent from last quarter sales of Rs 492.03 crore and up 23.78 per cent from last year's same quarter sales of Rs 348.71 crore. The company reported net profit after tax of Rs -2.96 crore in the latest quarter.

    Promoter/FII Holdings

    Promoters held 55.67 per cent stake in the company as of March 31, 2020, while FIIs held 20.06 per cent, DIIs 0.97 per cent and public and others 32.76 per cent.



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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