HDFC Securities' research report on Nippon Life India Asset Management
While we remain concerned about the loss of market share in both debt and equity assets—down 332/275bps since Mar-19 to 7.5/6.8%—we believe that post ownership change, NAM stands to benefit from increased credibility to raise HNI/institutional capital. We expect the company to focus on improving investment return performance and gradually recoup part of its lost market share, although this journey would neither be easy nor inexpensive. We expect NAM to post an FY21-23E revenue/PAT CAGR of 13.7/15.8% and retain a REDUCE rating with TP of Rs 280 i.e. at 36x (20% discount to HDFCAMC’s multiple) FY22E NOPLAT + cash and investments. Any signs of improving performance and market share will be key re-rating drivers for the stock.
We expect a gradual recovery in assets and earnings. For FY21E, we expect revenue/EBIT to decline 15.0/21.2% YoY respectively.
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