Buy Nippon Life India AMC Ltd For Target Rs.1,380 Motilal Oswal Financial services Ltd
Revenue, EBITDA in line; PAT beat led by higher other income
* Nippon Life India AMC’s (NAM) 1QFY27 operating revenue came in at INR7.7b (in line), up 26% YoY/4% QoQ. Yield stood at 40.8bp vs. 39.6bp in 1QFY26 and 40.8bp in 4QFY26.
* Total opex came in at INR2.6b (in line), growing 19% YoY/12% QoQ. EBITDA came in at INR5.1b (in line), up 31% YoY/flat QoQ. EBIDTA margins were at 66.2% vs. 64% in 1QFY26 and 68.6% in 4QFY26.
* PAT stood at ~INR5b (14% beat due to high other income), up 27% YoY/31% QoQ. PAT margins stood at 65.6% vs. 65.2% in 1QFY26 and 52% in 4QFY26.
* Following the transition to the BER framework effective Apr'26, changes in expense ratios have largely been passed on to distributor commissions, resulting in a minimal earnings impact. Management continues to guide for a 1-2bp annual decline in blended yields as AUM scales up.
* We have increased our earnings estimates to factor in higher Equity and ETF AUM growth partially offset by lower growth in debt funds. We reiterate our BUY rating on the stock with a TP of INR1,380, based on 47x FY28E core EPS.
Key takeaways from the management commentary
* NAM is ready to launch SIF products upon regulatory approvals and is led by four personnel.
* Fixed-income flows remained volatile across the industry due to interest rate movements, although the company continues to promote long-term asset allocation and debt portfolio adoption. * NAM continues to rank among the top three AMCs across fintech platforms and expects to maintain this position going forward.
Valuation and view
* NAM AMC remains well positioned to deliver healthy long-term growth, supported by its strong retail franchise, resilient SIP momentum, expanding digital ecosystem and continued market share gains in equity assets and flows. The company continues to invest aggressively in technology, distribution and branding while broadening its product offerings across mutual funds, ETFs, SIFs and alternative assets.
* We have increased our earnings estimates to factor in higher Equity and ETF AUM growth partially offset by lower growth in debt funds. We reiterate our BUY rating on the stock with a TP of INR1,380, based on 47x FY28E Core EPS
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