Nuvama Wealth Management Ltd’s shares recovered slightly on Monday, but are still down about 8% from Thursday’s close of ₹8,175.50 apiece as it became a casualty of the Jane Street saga.
Jane Street is a US-headquartered trading firm present in equity and derivatives markets in India. It is accused of manipulating cash market prices to make multifold gains in options that are far higher than its cumulative losses in cash and futures segment.
There is a general fear that the Securities and Exchange Board of India’s (Sebi’s) action could reduce the trading volumes further, which led to losses in share prices on Friday of other capital market plays such as Angel One Ltd and BSE Ltd. But Nuvama Wealth is attracting more attention as it was reportedly acting as the broker for Jane Street.
Generally, investors should not worry much about the Jane Street issue for capital market-related stocks. Why? Jane Street was more active in Bank Nifty index-related options trading, which could be manipulated relatively easily due to its concentrated nature. HDFC Bank and ICICI Bank accounted for over 50% of the weightage in the index as of June end.
Bank Nifty weekly options were discontinued in Q3FY25, and the impact is visible in the reduced trading volumes in Q4FY25. Sure, Bank Nifty monthly options are still there, but their expiry is on the same day as Nifty’s, making manipulation tougher.
Notably, Sebi’s order does not mention any wrongdoing on the part of Nuvama. Also, the impact on the company’s revenue is unlikely to be significant as its FY25 revenue had less dependence on capital markets–institutional equities and investment banking.
Wealth management and asset services contributed 49% and 23%, respectively, to FY25’s total revenue worth ₹2,901 crore. The share of capital markets segment was 26% or ₹759 crore.
Nuvama’s capital markets segment had some contribution from Jane Street business as it reportedly executes cash segment trades of Jane Street. Jane Street’s activities flourished during January 2023 to March 2025. Against this backdrop, Nuvama’s capital markets division income grew to ₹759 crore in FY25 from ₹389 crore in FY22.
Even if Jane Street contributed 50% of the division’s incremental income over FY22 to FY25, it would be ₹200 crore at best or 7% of the company’s total FY25 revenue. Though there’s a temporary ban on Jane Street, this entire revenue may not be lost in future as the Sebi order indicates that restrictions on the firm’s trading activities may be lifted if it deposits the unlawful gains.
Also, some part of the negative impact of lower income from capital market division has already been captured in Nuvama’s March quarter (Q4FY25) financials. The division’s revenue slipped by 6% QoQ to ₹163 crore in Q4FY25.
Also Read | Mint Explainer: How Sebi sniffed out Jane Street’s market manipulations
The extent of Nuvama’s asset services division that might have earned fees from Jane Street is unclear at present, but it could be made up as the division is scaling up fast with more clients. The assets under custody grew 38% year-on-year in FY25.
The Nuvama stock trades at 24x estimated FY26 earnings based on Bloomberg consensus, whereas the largest non-bank wealth manager in India 360 One WAM Ltd trades at 40x. The latter has historically quoted at a premium to the former due to reasons such as absence of volatile income stream from capital markets division and higher annual recurring income. But the valuation gap could narrow as 360 One too has got into institutional broking and investment banking with the acquisition of B&K Securities.
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