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About the stock: Nippon Life India AMC is among the largest asset managers in India with an AUM size of | 3.63 lakh crore. The company has a strong distribution network with 91000+ distributors.

            • Market share as on Q4FY23 was at 7.2%

            • Strong presence in B-30 cities that contribute to 19% of total AUM

Q4FY23 Results: Steady quarter with a stable market share.

             • QAAUM was at | 293200 crore, up 3% YoY and flat QoQ. Market share was steady at ~7.2%

            • Revenue declined 2% QoQ at | 348 crore; YoY it was up 3% mainly due to steady yields at ~47 bps

            • Lower other income led to 3% QoQ decline in PAT at | 198 crore

What should investors do? Nippon Life India AMC’s share price has remained volatile in the recent past due to subdued movement in industry AUM and uncertainty related to regulatory change.

            • We maintain our HOLD rating on the stock

Target Price and Valuation: Steady market share provides comfort. However, regulatory change may impact yields and result in lower earnings. Thus, we value Nippon AMC at ~4.7% FY25E AUM and revise our target price from | 300 to | 270 per share.

Key triggers for future price performance:

            • Better performance is expected to aid a gradual improvement in market share and, thus, AUM growth

           • Significant presence in ETF segment (vs. peers) and focus on non-MF business is seen to improve operational capabilities and earnings growth

           • Uncertainty on revision in TER rates, structure to remain an earnings risk. Fresh flows in debt schemes, after tax amendments, needs to be watched

Alternate Stock Idea: Apart from Nippon Life, in our coverage we like MCX.

           • MCX is the leader in commodity derivatives exchanges in India with ~96.8% market share in terms of commodity futures turnover

           • BUY with a target price of | 1700

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