Q4FY21 Result Update - Nippon Life India AMC - ICICI Direct

Nippon Life AMC posted a steady operational performance with sequential improvement in topline and pick-up in AUM growth. Revenue from operations was up 12.5% QoQ, 10.0% YoY to Rs. 302 crore on the back of improved revenue yields, which were up 3 bps QoQ to 0.53% of AUM. Revenue yields improved QoQ as proportion of equity AUM increased. Other income was at Rs. 60 crore vs. Rs. 130 crore QoQ and MTM loss of Rs. 125 crore YoY. Opex to AUM increased marginally from 24 bps to 25 bps both on QoQ and yearly basis, primarily driven by 41% rise in other expenses mostly related to investment in technology and digital infrastructure. PAT fell 21% QoQ to Rs. 166 crore due to volatile other income despite steady operational revenue.

Valuation & Outlook

Focus on passive segment through ETF (market share of 13%) with substantial market share in terms of number of investor folios and volume on exchange (~72% market share in volume) provides advantage in AUM growth, though profitability remains low. Robust client accretion led by strong distribution and digital focus remains positive for traction in AUM ahead. Focus on non MF segment through managed AUM of Rs. 1.26 lakh crore to support revenue and earnings. Sebi came out with a circular stating 20% of compensation of key employee of AMC to be paid in terms of MF units. Implementation of circular in its existing forms could lead to higher expense but clarity is awaited. We continue to remain positive on the business model and expect earnings to grow at 7% CAGR in FY21-23E to Rs. 763 crore. Consequently, we value the business at ~7.6% of FY23E MF AUM and revise our target price Rs. 360 (earlier Rs. 300). We maintain HOLD.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_NipponAMC_Q4FY21.pdf

Shares of Nippon Life India Asset Management Ltd was last trading in BSE at Rs.339 as compared to the previous close of Rs. 342.3. The total number of shares traded during the day was 15345 in over 464 trades.

The stock hit an intraday high of Rs. 345.4 and intraday low of 339. The net turnover during the day was Rs. 5251121.

Source : Equity Bulls

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