Hold Nippon Life India Asset Management; target of Rs 305: Sharekhan

Sharekhan's research report on Nippon Life India Asset Management

NAM India reported a PAT of Rs. 206 crore (down 4% y-o-y/ up 81%) mainly driven by higher other income sequentially (Rs.82 crore vs loss of Rs. 17 crore q-o-q) aided by reversal of MTM losses of Q1FY23. Revenues grew by 1% y-o-y/5% q-o-q to Rs 332 crore while growth in Quarterly average assets under management (QAAUM) stood at 7% y-o-y/2.0% q-o-q. Top line yield stood at ~47 bps vs 45 bps q-o-q & 49 bps y-o-y. Company attributed the increase in top-line yields to - change in mix towards higher yielding equity segment (44% vs 42% q-o-q, slightly higher yield in ETF segment and better pricing power in debt segment as incremental returns are rising. However, there could be 2-3bps moderation expected in top line yields going forward. ans in MDF and laminates are on track. The company announced particle board greenfield expansion in Tamil Nadu at a capex of Rs. 550 crore. Century Plyboards is scouting for land in Hoshiarpur for plywood expansion.

Outlook

At the CMP, the stock trades at 21.8x and 19.6x its FY2023E and FY2024E EPS. We maintain Hold on NAM India with an unchanged PT of Rs. 305.

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