Buy IIFL Wealth Management, target price Rs 2217: ICICI Securities

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ICICI Securities has buy call on IIFL Wealth Management with a target price of Rs 2217. The current market price of IIFL Wealth Management is Rs 1683.7. Time period given by analyst is one year when IIFL Wealth Management Ltd. price can reach defined target.

IIFL Wealth Management Ltd., incorporated in the year 2008, is a Mid Cap company (having a market cap of Rs 14929.52 Crore) operating in NBFC sector.

IIFL Wealth Management Ltd. key Products/Revenue Segments include Fees & Commission Income for the year ending 31-Mar-2021.

Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 578.97 Crore, up 1.46 % from last quarter Total Income of Rs 570.62 Crore and up 32.83 % from last year same quarter Total Income of Rs 435.88 Crore. Company reported net profit after tax of Rs 165.46 Crore in latest quarter.

Investment Rationale
IIFL Wealth & Asset Management’s (IIFLW) earnings growth of 8% QoQ/64% YoY in Q4FY22 to Rs1.68n was in line with expectations. Transition towards ARR strategy was visible all through FY22, and in Q4FY22 as well, ARR revenue grew 57% YoY (constituting 56% of overall revenue). Besides, earnings were primarily buoyed by transactional/brokerage revenue of Rs1.7bn (Rs1.33bn /Rs920mn/Rs210mn in Q3/Q2/Q1FY22). This was offset by elevated opex (up 5.8% QoQ/54% YoY) with cost to income at 52.3%. The company has guided for FY23/FY24 earnings that is 3-5% higher than estimates. It targets: i) ARR asset growth of 25-30%, ii) overall retention ratio of 55bps, iii) reduction in cost-to-income ratio to 45% in FY23 and 41- 43% in FY24, iv) PAT CAGR of 20% over FY22-24E, v) tangible RoEs of >25% for FY23 and towards 30% for FY24. It maintains BUY with an unchanged target price of Rs 2,217.

Promoter/FII Holdings
Promoters held 23.15 per cent stake in the company as of 31-Dec-2021, while FIIs owned 22.69 per cent, DIIs 3.15 per cent.

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