IGI Logo

Strong quarter due to favorable asset mix

Quick Pointers:

* Healthy quarter with a beat in core income due to higher yields

* Market share in net equity flows intact due to consistent fund performance.

NAM saw a strong quarter as core income was 4.8% ahead since revenue was 3.9% higher to PLe. Despite strong QAAuM growth of 7.1% QoQ, blended yields were more by 1.5bps on account of (1) increase in equity share by 69bps QoQ to 45.9% (2) commission rationalization covering almost 60% of equity AUM as of Sep’25 (3) fall in liquid/ETF share by 108/48bps QoQ and (4) increase in ETF yields due to rise in share of gold/silver ETF by 290bps QoQ to 19%. NAM continues to gain equity market share that enhanced by 5bps QoQ and 18bps YoY to 7.2% as of Sept’25 due to healthy net flow market share (~10% in H1FY26) led by consistent fund performance in 3/5-yr buckets. Over FY25-28E we expect core PAT CAGR of 14.6%. We tweak multiple on Sep’27 core EPS to 35x from 34x and raise TP to Rs930 from Rs900. Retain ‘BUY’.

* Strong quarter due to beat on revenue yields: QAAuM at Rs6,565bn (+7.1% QoQ); was in-line while equity (incl. bal) at Rs3,014bn grew by 8.8% QoQ. Revenue grew by 8.5% QoQ and was higher at Rs6.58bn (PLe Rs 6.34bn) led by better revenue yield at 40.1bps (PLe 38.6bps). Opex grew by 4.6% QoQ and was a bit more at 2.4bn (PLe Rs2.3bn); staff cost ex-ESOP as expected was Rs1.14bn while other opex was higher at Rs855mn (PLe Rs788mn). ESOP cost was lower at Rs90mn. Hence, core income (+10.9% QoQ) was a beat at 4.2bn (PLe Rs4bn) resulting in operating yields of 25.5bps (PLe 24.4bps). Other income was-in-line at Rs366mn (PLe Rs400mn). Tax rate was stable at 24.4% (PLe 24.5%). Hence, core PAT yields came in at 19.3bps (PLe 18.4bps). PAT came in at Rs3.4bn (PLe Rs3.3bn) due to higher revenue.

* Equity performance and flows remain healthy: Equity share increased QoQ to 45.9% (45.2% in Q1FY26) while debt inched up by 90bps to 14.4% and share of liquid/ETF fell by 108/48bps. Despite strong equity growth QoQ, blended yields were higher to PLe by 1.5bps on account of (1) increase in equity share by 69bps QoQ (2) commission rationalization covering almost 60% of equity AUM as of Sept’25 (3) decline in liquid/ETF share (4) better ETF yields since share of gold+silver increased by 290bps QoQ to 19%. Performance in 3/5yr buckets remains superior and net equity flow market share remained strong in H1FY26 at ~10%. As net flow market share remains higher than stock, NAM continues to gain equity market share; it enhanced by 5bps to 7.21% as of Sept’25 from 7.16% as of Jun’25.

* ESOP cost was a tad lower; no major change in opex estimates: ESOP cost was lower for the quarter and company revised its ESOP cost guidance for FY26E a bit lower to Rs400-430mn for FY26 and Rs260mn for FY27. We have factored the same in our estimates. Adjusting for ESOP, we expect staff cost CAGR of 12% over FY25-28. Other opex increased by 11% QoQ driven by i) branding exercise ii) investments in technology and iii) maintenance charges of new office. We estimate opex CAGR of 11% over FY25-28E.

Please refer disclaimer at https://www.plindia.com/disclaimer/

SEBI Registration No. INH000000271