Nuvama Wealth (NUVAMA)

FairStock Score: 22/100 — RISKY

Score breakdown: P/E: 1/3 · ROCE: 1/2 · Growth: 1/2 · Dividend: 1/1

Key Financials

Strengths

• ROE of 29.43% and ROCE of 20.40% show strong capital efficiency
• 5-year revenue CAGR of 24.63% with latest quarter sales of ₹1,104 Cr and net profit of ₹254 Cr
• Promoter holding of 54.20% aligns ownership interests
• Piotroski F-Score of 7/9 indicates reasonably healthy fundamentals
• Dividend yield of 2.32% provides some return to shareholders

Concerns

• Valuation is rich: P/E of 22.06, P/B of 7.17, and price far above the Graham Number of ₹350.70
• High leverage with Debt/Equity of 2.37 and Altman Z-Score of 1.03 in warning territory
• Negative free cash flow of ₹-434 Cr despite reported profits
• Growth of 12.7% with PEG of 8.35 does not support the premium price

AI Analysis

Let's look at Nuvama with Graham's eyes. It is a quality business on the surface—an ROE of 29.43% and ROCE of 20.40% are impressive, and promoter holding of 54.20% makes me feel ownership is aligned. Sales grew 13% and profit 12.7%, while five-year revenue CAGR of 24.63% shows the franchise has momentum. The latest quarter delivered ₹1,104 Cr revenue and ₹254 Cr profit—a strong margin. But Mr Market is asking ₹1,375.50 for a book value of only ₹191.73. That is 7.17 times book and 22 times earnings. Graham taught me to pay for tangible value with a cushion; here, Graham Number is ₹350.70, implying a negative margin of safety of -254.98%. The PEG ratio of 8.35 tells me the current growth rate does not justify the premium. The balance sheet bothers me. Debt/equity of 2.37 is high for a financial intermediary, and Altman Z-Score of 1.03 sits in distress territory, though broking models can mislead this ratio. Free cash flow is negative at -₹434 Cr—earnings are not converting to cash, a red flag. The stock's 52-week range of ₹1,096.90 to ₹2,067 also tells me this is a violent, cyclical business tied to market activity and investor sentiment. In Buffett terms, this is a good business at a bad price. I would not call it a broken company, but as a value investor, I need margin of safety. At this price, Nuvama offers none. If I wanted cyclical exposure to Indian wealth and broking, I would wait for a better price and watch how the leverage and cash conversion evolve. No purchase today.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer