Prabhudas Lilladher's research report on Nippon Life India Asset Management
We initiate coverage on NAM with ‘BUY’ rating given (1) consistent equity outperformance translating to improved net flows and in-turn market share gains (2) focus on stronger investment process and risk management and (3) robust retail franchise as indicated by enhancing SIP AUM and healthy addition of unique investors plus folios over FY19 to 9MFY24. Significant under-penetration in Indian MF industry suggests strong growth prospects of AMC space which could benefit NAM (4th largest player). We expect healthy core earnings CAGR of 23.4% over FY24-26E led by higher than industry equity AAuM growth and operational efficiency.
Outlook
The stock is valued at 25x FY26E core EPS implying 32% discount to HDFC AMC. We assign multiple of 30x to arrive at a TP of Rs610. Initiate with ‘BUY’.
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