Rationale

 While arriving at the ratings, ICRA has considered the consolidated financials of Nuvama Wealth Management Limited (NWML). It has taken a consolidated view of the credit profiles of NWML and its subsidiaries (together referred to as Nuvama or the Group hereafter), including Nuvama Wealth Finance Limited (NWFL), as the companies have operational and business synergies in addition to a shared name and management oversight. The ratings factor in Nuvama’s strong market position in the wealth management business with the Group holding the second largest client assets among non-bank wealth managers, its diversified offerings across the capital market businesses, comfortable capitalisation and healthy profitability. Driven by the sizeable earnings contribution from the asset services, institutional equities (IE) and investment banking (IB) businesses, Nuvama reported a strong performance in FY2025 with a 58% year-on-year (YoY) increase in its profit after tax (PAT) and a return on equity (RoE) of 31% (24% in FY2024 and 15% in FY2023). The performance remained strong in Q1 FY2026 with RoE of 30%. While the Group could witness some moderation in revenue in the asset services and IE segments on account of regulatory implications for one of its key clients in July 2025, the overall impact on its profitability is expected to remain limited. That said, the Group’s business remains inherently exposed to the volatility of capital markets. Hence, a moderation in performance due to adverse domestic or global developments cannot be ruled out. While the consolidated borrowings have increased on account of the rise in the working capital requirements and the scaleup of the loan book, the capitalisation profile remains comfortable supported by healthy accruals. The aforesaid strengths are, however, partially offset by the exposure of the businesses to regulatory uncertainties and the associated franchise and reputational risks. Additionally, the loan book remains exposed to market risks, given the volatile nature of the underlying asset class and its sensitivity to capital market movements. Nevertheless, sizeable accruals and comfortable capitalisation provide a buffer to absorb any losses and incremental credit costs. The Positive outlook considers Nuvama’s improving scale and market position in the wealth management, asset management, asset services (clearing & custody) and capital market businesses, along with its strong operational and financial performance despite the evolving operating landscape in terms of regulations and competition. The wealth management business ramped up successfully in recent years with the healthy trajectory of net new money into annual recurring assets amid industry tailwinds. This, coupled with the focus on the asset management business, is expected to continue driving an increase in the share of recurring revenues.