Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 25 Feb, 25 | NU | Buy | USD 11.02 | USD 11.87 | USD 12.5 | 20 days | 13.4% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
Nu Holdings Ltd. provides digital banking platform and digital financial services in Brazil, Mexico, Colombia, and internationally. It offers Nu credit and debit cards; Ultraviolet credit and debit cards; and mobile payment solutions for NuAccount customers to make and receive transfers, pay bills, and make everyday purchases through their mobile phones. The company provides savings solutions, such as Nu Personal Accounts, a digital account solution that supports all personal finance activities, from daily purchases and money transfers to savings; and Nu business accounts designed specifically for entrepreneur customers and their businesses. In addition, it offers NuCrypto, a solution for buying and selling cryptocurrencies through the Nu app; NuInvest, an investment product that provides equity, fixed-income, options, and ETF products, as well as multimarket funds with curated asset allocations based on the customer's risk profile and financial position; personal unsecured loans; in-app "buy now pay later' solution for Nu card customers to pay credit and debit purchases, and banking payment slips over time in up to twelve installments; and NuInsurance protecting solutions to help its customers secure life insurance and funeral benefits. The company was founded in 2013 and is headquartered in Sao Paulo, Brazil.
Rapid Customer Base Expansion – The company added 20.4 million new customers in 2024, bringing the total to 114.2 million customers, a 22% YoY increase. Mexico alone grew 91% YoY, surpassing 10 million customers.
Strong Revenue and Profit Growth – Nu Holdings achieved $11.5 billion in revenue, reflecting a 58% year-over-year (YoY) growth, while net income nearly doubled from $1.03 billion in 2023 to $1.97 billion in 2024. This demonstrates the company's ability to scale profitably.
Lower Engagement in New Markets – While customer growth in Mexico and Colombia outpaced Brazil, lower activity levels in these countries temporarily impacted Nu’s consolidated activity rate, which stood at 83.1%, slightly lower than previous quarters.
Declining Net Interest Margin (NIM) – Nu’s net interest margin (NIM) contracted by 70 basis points sequentially to 17.7% in Q4 2024, mainly due to FX volatility and deposit strategy shifts in Mexico and Colombia.
Key investment risks for Nu Holdings include foreign exchange volatility affecting profitability, regulatory uncertainties in Latin American markets, potential declines in customer engagement in newer regions, and rising competition from traditional banks and fintechs.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 11.02 | 9.59 | 11.87 | 12.5 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Record Customer Growth and Market Expansion
Nu Holdings Ltd. one of the largest digital financial services platforms globally, reported substantial growth in 2024, reflecting its commitment to expanding financial access across Latin America. By the end of the year, Nu served 114.2 million customers, marking a 22% year-over-year (YoY) increase with 20.4 million net additions. In Brazil, Nu became the third-largest financial institution by customer count, while Mexico surpassed 10 million customers, and Colombia reached 2.5 million customers. This expansion underscores the company's ability to attract and retain users, solidifying its leadership in digital banking.
Enhanced Engagement and Efficient Operations
Nu continued strengthening customer engagement, reporting a Monthly Average Revenue per Active Customer (ARPAC) of $10.7 in Q4 2024, a 23% YoY increase on an FX-neutral (FXN) basis. More mature customer cohorts reached an ARPAC of $25, demonstrating deeper banking relationships. The company maintained its low-cost operating model, with a Monthly Average Cost to Serve per Active Customer at $0.8. Additionally, the efficiency ratio improved by 150 basis points sequentially, reaching 29.9%, highlighting Nu’s ability to scale profitably while maintaining cost discipline.
Robust Financial Performance and Profitability
Nu’s financial results for 2024 reflected strong profitability and revenue growth. The company achieved $11.5 billion in revenue, a 58% YoY increase, while net income nearly doubled to $1.97 billion, compared to $1.03 billion in 2023. Q4 2024 net income reached $552.6 million, representing an 85% YoY growth on an FXN basis. Adjusted net income for the quarter rose by 87% to $610.1 million, with an annualized adjusted return on equity (ROE) of 32%. These results position Nu among the most profitable financial institutions globally while maintaining a strong capital base.
Strong Asset Growth and Credit Performance
Nu continued to expand its asset base with an interest-earning portfolio of $11.2 billion as of December 31, 2024, reflecting a 75% YoY increase. The lending portfolio more than doubled to $6.1 billion, while total deposits grew by 55% YoY to $28.9 billion. In Brazil alone, deposits reached $23.1 billion. The company also improved asset quality, with its 15-90-day non-performing loan (NPL) ratio declining 30 basis points to 4.1% in Q4 2024. The 90+ day NPL ratio decreased by 20 basis points to 7.0%, demonstrating effective risk management and a shift toward lower-risk customer profiles.
Strategic Advancements in Lending and High-Income Segments
Nu strengthened its secured lending business in Brazil, where the portfolio grew 615% YoY to $1.4 billion, representing 23% of the total lending portfolio. The company signed nine new agreements with public sector entities, expanding its addressable market for payroll loans to cover 70% of the segment. Additionally, Nu’s high-income banking segment, Ultravioleta, saw its customer base grow by 132% YoY, reaching approximately 700,000 users. Credit card purchase volume from Ultravioleta customers increased by 106% to $1.8 billion in Q4 2024, contributing 10% of Brazil’s total credit card purchase volume.
Diversification and Ecosystem Expansion
Nu continued to broaden its service offerings with the launch of NuTravel, a travel platform integrated with a multi-currency account, and NuCel, a mobile virtual network operator (MVNO) in partnership with Claro. The company’s marketplace platform attracted over 1 million customers, further embedding Nu into customers' financial lives. As Nu prepares for further global expansion, it remains committed to executing its strategy, driving customer-centric innovation, and sustaining long-term growth across its key markets.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Nu Holdings Ltd (NYSE: NU) at the closing market price of USD 11.02, as on February 24, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Financial Services Industry: Banks - Regional
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | |
|---|---|---|---|---|---|---|---|
| NU Nu Holdings Ltd |
0.24 2.35% | 10.48 | 117.43 | 24.10 | 12.31 | 6.54 | |
| HDB HDFC Bank Limited ADR |
-1.1969 1.80% | 65.24 | 20.81 | 20.96 | 0.11 | 4.77 | |
| CIHKY China Merchants Bank Co Ltd |
-0.5 1.69% | 29.17 | 6.61 | 5.68 | 0.48 | 0.77 | 3.43 |
| CIHHF China Merchants Bank Co Ltd Class H |
- -% | 6.15 | 6.10 | 5.67 | 0.44 | 0.77 | 3.43 |
| IBN ICICI Bank Limited |
-0.335 1.06% | 31.18 | 17.79 | 16.95 | 0.07 | 3.08 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
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 February 24,2025. The reference data in this report has been partly sourced from REFINITIV.
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.
Target: 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. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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