Hold Nippon Life India Asset Management; target of Rs 265: Sharekhan

Sharekhan's research report on Nippon Life India Asset Management

NAM India reported 7%/ 10% q-o-q growth in Core revenue and Core PBT, respectively driven by improvement in top-line yields to 48 bps (up 1 bps q-o-q). Improvement in yields was driven by higher proportion of Equity AUM at 44% (+100 bps q-o-q) along with improvement in realization in debt funds and ETF funds. However, the top line yields may continue to be under pressure as new lower yielding AUM replaces older higher yielding AUM. QAAUM grew by 4% y-o-y/3% q-o-q to Rs 2,928 bn. Equity AUM grew by 9% y-o-y contributing 44% of total AUM vs 43% q-o-q. Market share remained stable in Equity AUM and total AUM. SIP flows for the quarter grew by ~15% q-o-q vs 6% for the industry, leading to an improvement in market share to ~7.6% (up 70 bps q-o-q).

Outlook

At the CMP, the stock trades at 19.0x/ 17.1x/ 16.3x its FY2023E/ FY2024E / FY2025E EPS. We maintain Hold on NAM India with an revised PT of Rs. 265.

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