360 One Wam, Nuvama Wealth Are Citi's Top Asset Management Picks For 2025 — Here's Why

Wealth managers with diversified asset base will likely perform well because of limited impact of mark to market, according to Citi Research. Higher flows and lower mark to market supports average asset under management accretion for diversified models whenever there's a slowdown in the market, the brokerage said.

Investors are concerned about transactional revenues for 360 One Wam Ltd. For Nuvama Wealth Management Ltd., investors worry about revenue from investment banking and incidental expenses segments, according to Citi Research.

Asset base reset in the third quarter and significant scope to improve operating leverage are expected to limit potential drag on earnings. Compared to peers, 360 One Wam and Nuvama Wealth Management are likely to see revival in profit before tax in fourth quarter, Citi estimates.

Despite modest de-rating in last three months, Citi Research recommends investors to wait for better entry points for asset management companies.

Market exuberance is likely to ignore business headwinds. The current prices are looking past headwinds related to non-mutual fund segments and expected slowdown in revenue, Citi Research said. The brokerage expects incremental moderation going forward in registrar and transfer agents for these companies.

Markets may ignore persistent episodic pricing revision in mutual funds, which will drag steady-state profit before tax trajectory, to factor in multiples for the mutual fund business. Citi Research expects overall flows into mutual funds may remain high in January, compared to historic state-steady levels. Moderation in December 2024 peaked, the brokerage said.

Fragmentation in markets, sustained bargain of large distributors and concerns over net equity slowdowns are key concerns for these asset management companies.

Asset management companies' topline, bottom line, and operating profit decreased during October–December. However, the full impact was not reflected for annuity models, owing to divergence between closing asset under management, and average asset under management for second quarter of financial year 2025. This provided sufficient headroom for average asset under management accretion in third quarter.

The brokerage sees average asset under management accretion to be 3–7% down, compared to third quarter of the ongoing financial year, assuming there's no significant market movements. In case there's no significant pick up in broader equity market sentiments, average asset under management and return to assets are likely to shrink in January–March.

Citi Research is positive on Nuvama Wealth Management Ltd., 360 One Wam and Prudent Corporate Advisory Services Ltd. It reiterated an 'overweight' rating on Nuvama Wealth Management, and an 'underweight' rating on Computer Age Management Services.