Buy Nippon Life India AMC; target of Rs 940: Motilal Oswal

Motilal Oswal's research report on Nippon Life India AMC

Nippon Life India AMC’s (NAM) operating revenue grew 20%/7% YoY/QoQ to INR6.1b (in line) in 1QFY26. Yields declined to 39.6bp from 40.7bp in 4QFY25 and 41.8bp in 1QFY25. Total opex grew 16% YoY to INR2.2b (in line) in 1QFY26. As a result, EBITDA rose 23% YoY to INR3.9b (in line) for the quarter. This led to an EBITDA margin expansion to 64% from 62.7% in 1QFY25. PAT stood at INR4b in 1QFY26 (8% beat due to higher other income), up 19%/33% YoY/QoQ. PAT margin stood at 65.2% in 1QFY26 vs 65.8% in 1QFY25 and 52.7% in 4QFY25.

Outlook

We have broadly retained our earnings estimates, with our AUM assumptions intact and higher other income offsetting the impact of a modest yield cut. We reiterate our BUY rating on the stock with a TP of INR940, based on 41x FY27E core EPS.