Nippon Life India Asset Management Company (NAM) has shown improved performance of its equity funds, stabilising SIP inflows, and concerns related to loss in market share, which seem to be left behind now. Moreover, efforts taken towards cost optimisation along with expected growth in AUM could result in operating leverage playing out and boosting return on equity (RoE). Given industry tailwinds, improving operational performance, and reasonable valuations (33x/28x its FY2022E/FY2023E EPS; On market cap to AUM basis, NAM at 7.6%, which is at a steep discount to 17% commanded by the industry leader); we see scope for further re-rating of the stock.
OutlookConsequently, we maintain our Buy rating with a revised price target (PT) of Rs. 418.
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