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Strong retail presence an advantage

NAM saw a steady quarter; core income was in-line as revenue/opex met expectations. An exceptional item of INR968mn was recognized, relating to past investments in YES Bank AT1 bonds; its impact would be ~5% of FY27 core PAT. Blended yield was down 0.4bps QoQ for NAM vs 1.3bps rise for larger peers. While net equity flow market share declined from 11% in Q1FY27 to 9.3% in Q2FY27, it remains above stock equity market share of 7.5%. Market volatility is slowing down MF industry flows, though strong retail presence may help NAM against potential redemptions. We tweak multiple to 37x from 38x on Sep’28 core EPS and change TP to INR1,200 from INR 1,250. Retain ‘BUY’.

Core metrics in-line; exceptional item impacts PAT:

QAAuM was in-line at INR7871bn (+4.7% QoQ); while equity (incl. bal) at INR3611bn grew by 6.9% QoQ. Revenue was inline at INR7.96bn (PLe INR7.93bn) with yield at 40.4bps. Opex as expected was stable at INR2.7bn. Staff cost at INR1.39bn and other opex at INR1.2bn were in-line. Core income as expected was INR5.2bn with operating yields at 26.6bps (PLe 26.4bps). Core PAT was INR3.93bn (PLe 3.96bn) with yield at 20.0bps (PLe 20.1bps). Other income was a miss at INR0.2bn (PLe INR0.4bn). Tax rate was 27.9% (PLe 25%). PAT declined by ~36% QoQ to INR3.2bn due to exceptional item of INR967.6mn related to Yes Bank’s AT-1 bonds.

Equity yield contracted QoQ due to growth:

Equity share was up to 44.9% (43.8% in Q4’26) while that of debt/liquid was 10.9%/6.7% (-57/+46bps QoQ). Blended MF yield for NAM was down by 0.4bps QoQ vs 1.3bps rise for ICICIAMC/HDFCAMC. Despite increase in share, equity yield was down 2bps QoQ to 52bps and management attributed the same to telescopic pricing given strong equity growth of 6.9% QoQ. SIP flow was steady QoQ at INR37.2bn and while net equity flow market share declined from 11% in Q1FY27 to 9.3% in Q2FY27, it remains above stock equity market share of 7.5%. As per the company, due to market volatility, unique investor growth has been affected and flows into the MF industry have started slowing down.

Strong retail presence to aid in tiding over current phase:

NAM is communicating to its distributors to encourage investments in hybrid, multi-asset, large-cap, multi-cap and debt products to encourage diversification and lower-risk investing. Management noted that flows through digital/fintech channels remained steady, with limited impact from industry slowdown. Company believes its strong SIP flow share of ~11% and 1/3rd market share in unique investors, provides a cushion against potential redemptions.

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SEBI Registration number is INH000000933