Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Nu Holdings Ltd (NYSE: NU) is a Brazil-based company that provides a digital banking platform. The Company offers its customers products across the five financial seasons: spending, saving, investing, borrowing, and protecting.

Kalkine’s Diversified Opportunities Report covers the Company Overview, Key positives & negatives, Investment summary, Key investment metrics, Top 10 shareholding, Business updates and insights into company recent financial results, Key Risks & Outlook, Price performance and technical summary, Target Price, and Recommendation on the stock.

Stock Performance:

• The stock has given a return of 28% in the last six months as well as by 63.33% in past nine months.
• The stock is leaning towards the higher band of its 52-week range of USD 8.87 and 52-week low price of USD 3.39, with the current price near an important support zone of USD 7.50-USD 8.00.
• The price is currently between both its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of 50.21.

              

1.2 The Key Positives, Negatives, and Investment summary

1.3 Top 10 shareholders:

The top 10 shareholders together form ~49.00% of the total shareholding, signifying concentrated shareholding. Trident Trust Company (Cayman) Ltd, and Tencent Holdings Ltd are the biggest shareholders, holding the maximum stake in the company at ~11.38% and ~7.72%, respectively.

1.4 Key Metrics:

In the financial performance analysis of NU, presented as a percentage of industry median figures, several key metrics were evaluated over the years FY18 to FY22. The revenue for NU increased significantly during this period, growing from USD 413.3 mn in FY18 to USD 6237.7 mn in FY22. Gross profit also exhibited substantial growth, rising from USD 298.6mn in FY18 to USD 3993.3mn in FY22. Furthermore, NU has generated between ROE for shareholders compared to its industry peers, while generating an impressive 14.2% net margins in Q3FY23.

Section 2: Business Updates and Corporate Business Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

 2.2 Insights of Q3FY23:

Section 3: Key Risks & Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

Stock Performance:

• The stock has given a return of 28% in the last six months as well as by 63.33% in past nine months.
• The stock is leaning towards the higher band of its 52-week range of USD 8.87 and 52-week low price of USD 3.39, with the current price near an important support zone of USD 7.50-USD 8.00.
• The price is currently between both its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of 50.21.

4.2 Fundamental Valuation

Valuation Methodology: Price/Book Value Multiple Based Relative Valuation

 

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is November 08, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

 Stop-loss: It is a level to protect against further losses in case of unfavorable movement in the stock prices.