Buy Nippon Life India Asset Management; target of Rs 725: Prabhudas Lilladher

Prabhudas Lilladher's research report on Nippon Life India Asset Management

NAM saw a stable quarter as core numbers came in as expected i.e. equity QAAuM growth, revenue yields, opex and core income were broadly in-line. As per the management, commission has been rationalized in multi-cap/large-cap schemes which contribute 29% to equity AuM. The positive impact on yields could be seen partly in Q4FY25 but fully in Q1FY26. Market share in net equity flows (ex-NFO) continues to remain positive and during 9MFY25 it was 10.4%. Hence, equity market share further expanded to 7.08% (+4bps QoQ). Closing equity AuM for industry corrected by 5.2% over Sep-Dec’25 and equity markets have a downward bias. A further correction could lead to earnings downgrade for AMCs.

Outlook

Over FY25-27E we expect core PAT CAGR of 15% and stock is valued at 27.7x on Sep’26 core EPS. Due to weak equity markets, we trim multiple to 30x from 35x and cut TP to Rs725 from Rs820. Retain ‘BUY’.