Bernstein encouraged investors to buy shares of Indian wealth management companies, claiming that their unjustified decline during the recent sell-off in the market makes them play an attractive role in achieving recovery.
Wealth managers have broadly underperformed asset managers during the drawdown, with year-to-date declines of 16% and 7%, while most listed asset managers have held up better or even posted gains.
However, Bernstein analyst Manas Agrawal said the withdrawal was not justified. Wealth managers carry more than 1x beta to equity markets, meaning that revenues and assets under management (AUM) rise and fall with market movements, but their client base – largely ultra-high-net-worth individuals – tends to be more flexible than retail investors in terms of flows and behavior.
Client assets are also spread across equity and non-equity asset classes, providing some protection. Concerns over competitive pressures on customer retention, which weighed on sentiment earlier, are also easing, Agrawal said.
“We do not believe larger relative drawdowns are justified, especially at a time when perceived risks to growth from competition are diminishing,” the analyst wrote.
Bernstein rates 360One Wealth and Nuvama Wealth as outperform and market performer.
Regarding valuations, Agrawal said both 360One and Nuvama look attractive. 360One is trading at 27x/23x consensus earnings for FY2027/28 following its recent rebound, while Nuvama is trading at 19x/16x on the same basis.
He described 360One as a “cleaner story,” pointing to strong net flow execution in the second and third quarters despite earlier concerns about relationship manager attrition.
As for Nuvama, Agrawal said investors could still make money but will need to be patient while PAG’s majority shareholder, which owns about 55% of the company, works to reset revenues in its clearing business.
The analyst acknowledged that earnings estimates for both companies are likely to be lowered to reflect the market decline in Q4 and a lower starting base of assets under management heading into fiscal 2027 (FY27).
But he said that “even if FY27/28 earnings are cut by about 10% for the entire drawdown period in March 2026, valuations will still be attractive.” Bernstein has not yet revised its estimates in light of the ceasefire announcement.
By contrast, Anand Rathi’s wealth has remained flat year-to-date and is up 9% since the start of the conflict in the Middle East, which Agrawal called “somewhat surprising” given the decline in revenues from down markets.
Source: Investing.com
