In the week gone by, the only two listed asset management companies HDFC AMC and Nippon India AMC reported their Q3 (Oct-Dec) of FY20 results.
HDFC AMC reported its results on Jan 21, while Nippon India AMC reported the quarterly numbers on Jan 23.
HDFC AMC reported a 45 percent jump in profit after tax (PAT) at Rs 352.5 crore for the three months ended December 31, 2019, rising from Rs 242 crore in same quarter last year. Its peer Nippon India AMC recorded profit of Rs 149.3 crore in Oct-Dec 2019, as against Rs.109.5 crore in the corresponding period last fiscal, a growth of 36 percent.
Similarly, the total assets under management of HDFC AMC stood at Rs 3.82 lac crore at the end of December, while Nippon India MF manages AUM of around Rs 3.1 lakh crore at the end of December quarter.
HDFC AMC’s total income rose 11 percent to Rs 592 crore in Oct-Dec while Nippon India AMC’s total income slipped by 11 percent on a y-o-y basis to Rs 360 crore in Oct-Dec 2019.
Nippon India AMC said its SIP book has largely remained flat in the Rs 800-850 crore range in the last six quarters, however, average ticket size continued to decline, largely on account of higher digital purchases and deepening penetration in B30 cities.
Also, as per Nippon India AMC’s management, several new corporate clients invested in NAM-India's fixed income schemes post the new ownership and rebranding in September-October 2019, it said.
On the other hand HDFC AMC SIP book rose at a slightly lower rate of about Rs 1,220 crore a month. In monthly SIPs, the fund has about a 14.3 percent market share.
For Nippon India AMC Centrum Broking expects 11.2 percent total AUM CAGR for FY20-FY22.
Haitong Securities valued Nippon Life using a dividend discount model to arrive at a fair value equivalent to 31.3x FY22 PER.
"We maintain buy rating with a 4 percent reduction in target price from Rs 400 to Rs 385 as we reflect the fact that the AUM decline in FY20 is sharper," it said.
"This resulted in lower 4 percent AUM CAGR over FY19-22 compared to 8 percent previously and our net profit estimates for FY20, 21 and 22 reduce by 2 percent, 6 percent and 10 percent respectively.
On a relative valuation basis, NAM is trading at a 28x FY22 PER," the brokerage said.
Sharekhan maintains its positive view on the stock and sees a 21-23 percent upside potential from current levels.
In terms of view on HDFC AMC, “HDFC AMC has a highly profitable product mix, given its share of individual equity and balanced schemes in total AUMs. Individual flows tend to be sticky while equity segments enjoy higher margins," according to Nirmal Bang Equities