IIFL Wealth Management hits 5% upper circuit on stock market debut

IIFL Wealth Management, the demerged entity of IIFL Holding, made its debut on Indian bourses on Thursday. The stock listed at Rs 1,200 per share on BSE and 1,210 per share on NSE.

Post listing, IIFL Wealth shares hit an upper circuit of 5 percent to trade at Rs 1,270 on NSE, while the benchmark Nifty50 was down 0.7 percent or 73 points at 10,768.

Analysts expected IIFL Wealth to list around Rs 950 to Rs 1,100. The key risk is the profit growth for FY20 while FY21 could be under pressure for wealth management business.

IIFL Holding has diversified its business into three categories, one of which is IIFL Wealth. IIFL Wealth manages alternative investment funds (AIFs). National Stock Exchange of India (NSE) and Bombay Stock Exchange (BSE) has permitted listing and commencement of trading for IIFL Wealth from September 19, 2019 and for IIFL Securities from September 20, 2019 (NSE notice for IIFL Securities is awaited).

The company\'s total assets under management are worth Rs 1.4 lakh crore excluding the custody assets. The topline stands at about Rs 10,600 crore with a profit of around Rs 375 crore.

Recently IIFL Wealth has acquired L&T Capital Market which has an AUM of Rs 25,000 crore. The company has reported a net profit of Rs 384 crore for the year ended March 31, 2019 and Rs 61 crore for the quarter ended June 30, 2019.

According to Kotak Securities, IIFL Wealth?s strong client franchise, innovative and diversified product offering and superior execution, makes it a good play on the niche wealth management space.

\"We look through near-term earnings pressure due to shifting focus on more recurring revenue streams that provide more predictability to its long-term earnings. While volatility in capital markets will constrain near-term AUM growth, a promising advisory offering, AMC business focused on alternatives and a synergistic NBFC will underpin yields. We reinitiate coverage with fair value of Rs 1,050,\" it added.