Buy IIFL Wealth\, target price Rs 1240: Motilal Oswal

Motilal Oswal has given buy rating to IIFL Wealth with a target price of Rs 1240. The share price moved up by 1.50 per cent from its previous close of Rs 1080.95. The stock’s last traded price is Rs 1065.

IIFL Wealth Management Ltd., incorporated in the year 2008, is a Mid Cap company (having a market cap of Rs 9418.12 Crore) operating in NBFC sector.

Financials
For the quarter ended 30-06-2020, the company reported a Consolidated sales of Rs 349.46 Crore, down 19.03 % from last quarter Sales of Rs 431.62 Crore and down -1.24 % from last year same quarter Sales of Rs 353.84 Crore Company has reported net profit after tax of Rs 82.27 Crore in latest quarter.

Investment Rationale
Over the past decade, IIFLWAM has evolved into one of the best wealth management franchises in the country, giving tough competition to the private sector and foreign banks. Over the past five years, it has become the alternate asset manager in India with unique product offerings. With IIFL ONE, the company is looking to revolutionize the way wealth management is offered in India. Traction on IIFL ONE remains healthy; however, improving the retention ratio remains the moot point. While in the near term, net inflows could be modest, the brokerage expects it to improve over the medium term. While there could be some pressure on profitability due to migration to IIFL ONE (net yields of 40bp in IIFL ONE v/s 50-60bp for other distribution assets), it would make revenues more stable and less susceptible to regulatory pressures.

Promoter/FII Holdings
Promoters held 22.9 per cent stake in the company as of June 30, 2020, while FIIs held 20.1 per cent, DIIs 1.4 per cent and public and others 55.6 per cent.