ICICI Direct recommended hold rating on Nippon Life India AMC with a target price of Rs 300 in its research report dated October 28, 2020.
ICICI Direct's research report on Nippon Life India AMC
Nippon Life India AMC (Nippon) posted modest PAT growth of 6% YoY to Rs 145 crore on a consolidated basis as cost rationalisation and healthy growth in other income compensated for a decline in revenues. Overall AUM declined on a yearly basis but saw some improvement sequentially. MF AUM fell marginally by 1% YoY on account of ~10% YoY reduction in equity AUM while debt and liquid AUM showed growth of 2% and 20% YoY, respectively. Consequently, contribution of equity MF AUM declined from 43% a year ago to 39% as on Q2FY21 while debt and liquid fund contribution increased to 30% and 17% from 29% and 14% in Q2FY20, respectively.
Therefore, we maintain our target price at Rs 300/share, valuing the stock at ~7.6% of MF AUM FY22E AUM. We revise our recommendation from BUY to HOLD.
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