Buy Nippon Life India Asset Management; target of Rs 820 Prabhudas Lilladher

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

NAM saw a good quarter with core income 2% higher due to 2.7% beat on revenue led by better blended yields as equity share inched up by 1.3% QoQ, while debt/liquid declined by 50/76bps. As per NAM, profitability would be preferred over market share, suggesting that incremental net flows would be compromised if they dilute yields. Led by better performance, net equity flow market share that rose from 5.3% in FY23 to 12% in FY24, is sustaining well. Hence, equity market share further expanded to 7.0% (+8bps QoQ). We raise core EPS for FY25E/FY26E by 10%/5% due to upgrade in FY25E closing equity AuM for the industry from 27% earlier to 40% since equity growth from MarSep’24 has been strong at 30% (8% flows and 22% MTM).

Outlook

Over FY24-26E, we see healthy core PAT CAGR of 28% (earlier 25%). Stock is valued at 28x on Sep’26 core EPS. We maintain multiple at 33x, but raise TP to Rs820 from Rs700 as we roll forward to Sep’26 core EPS. Retain ‘BUY’.

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