Nippon Life India AMC (Nippon) reported weak earnings, primarily led by MTM losses on investments. Regressive AUM growth, amid Covid-19, kept the topline under pressure with the outlook being a bit uncertain. Industry AUM declined to Rs 22.3 lakh crore as of March 2020 vs. Rs 26.5 lakh crore as of December 2019. Equity segment saw a decline of ~24% QoQ to Rs 8.3 lakh crore, led by a correction in markets. Debt, liquid schemes saw ~7%, ~11% QoQ, respectively, decline in AUM due to outflows in the quarter. SIP flows continued to remain consistent at Rs 8600 crore in Q4FY20.
OutlookNear term outlook remains volatile. However, given elevated economic uncertainty, business model without large credit risk remain preferred. Therefore, we have a BUY rating on the stock with a target price of Rs 300/share.
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