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Strong AuM growth and market share gain: Nippon India Life Asset Management recorded strong AuM growth of 11.8% QoQ/23% YoY to Rs 3,506 Bn which was higher than the industry growth of 9% QoQ/20.3% YoY to Rs 47,000 Bn even after the regulator had announced restriction in lumpsum investment in small cap funds. The higher than industry growth led to gain in market share after 5 consecutive quarters by 18.3bps QoQ/16.1bps YoY to 7.5%. The company gained market share in each category of funds during the quarter. Its market share in equity increased by 26bps QoQ to 6.53%

Stable yields: The company blended yields on assets remained stable at ~45bps on a consolidated basis after continuous decline in yields. The stabilizing yields was mainly due to increasing proportion of equity AuM in overall AuM mix. The company continues to focus on assets which are high yielding and remain sticky in nature. The equity AuM increased by 180bps QoQ/380bps YoY.

Revenue and profitability growth: Owing to growth in AuM and stabilizing yields, the revenue from operations saw a healthy growth of 11.9% QoQ/19.1% YoY to Rs 368 Cr. The company managed to control its costs which led to increase in EBITDA by 19.3% QoQ/25.3% YoY to Rs 236 Cr along with margin improvement of 400bps QoQ/316bps YoY to 64.2%. Miscellaneous expenses increased due to its investment in technology which shall aid in operating leverage going forwards. Employee cost has remained stable due to increasing digitalization as certain process has become more efficient with backend support.

Quarterly SIP book gaining traction: The company continues to see traction across the funds amongst the retail investors as the quarterly SIP book saw a surge of 37.6% QoQ/84.4% YoY to Rs 47.2 Bn. Along with the growth in quarterly book, its unique investors continue to increase at a healthy rate at 3.5% QoQ/9% YoY to 14.6 Mn. However, its market share in unique investor declined marginally by 70bps QoQ/90bps YoY to 36.2%. Quarterly SIP folios increased by 15.4% QoQ/39.5% YoY to 6 Mn. Its folio count in B-30 cities were up by 5.1% QoQ/15.5% YoY to 8.2 Mn, however market share declined marginally.

Retail and HNI market share increase: During the quarter, the company saw an uptick in the retail and HNI investors in the overall investors mix. The increase came in the at the expense of corporate investors which declined by 200bps QoQ/500bps YoY to 42%. The company continues its focus on individual customer category. Also, the market share in the individual investor category increased by 29bps QoQ to 7.45% while its AuM increase 14% QoQ to Rs 2,094 Bn.

Valuation: We remain positive on NAM-India on the back growth on its AuM, increase in folios and unique investment and stabilizing yields along management indicating that yields will start upward trend from FY25E onwards. The company has leadership position in ETFs with a market share of 61% in terms of volume while its hold in B-30 cities is strong than its peers. We expect revenue/EBITDA/PAT to grow at a CAGR of 21.6%/28%/23.7% over FY23-25E. Factoring the AuM growth of 22% CAGR over FY23-25E along with yields at ~0.44% by FY25E, we maintain Buy and revise our target upwards to Rs 435 valuing the company at 25x PE of its FY25E EPS.