Hold Nippon Life India AMC; target of Rs 300: ICICI Direct

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.

Outlook

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.