Nippon India AMC - Q1 FY22 Result Report - YES Securities

(Rating: BUY, TP: Rs511, Upside: 26%)

- Our view: We have cut our estimates by 6% for FY22E and FY23E each to factor in lower than expected yields during the quarter. However, we are enthused by the market share gains the company has seen in the past quarter and also by significant folio additions indicating regaining of brand strength in the lower tier markets. We expect a 17% PAT and 32% core PAT CAGR over FY21-24E, for which we find the valuations of FY23E P/E of 28.4x attractive. Retain our BUY recommendation with a 1-year price target of Rs511 (Rs452 earlier) based on 32x average FY23E and FY24E earnings (30x FY23E earnings earlier).

- Revenue: Management Fees was at Rs.3bn was lower than our estimates. Management fees were higher by 30% yoy but were flat on sequential basis.

- Overall AUM growth: Led by inflows in fixed income & passive funds, and MTM gains in the equities; also, Q1 FY22 witnessed positive trends in equity inflows

- Yield on Management fees: The Yield on Management fees was at 0.51%, which was a decline of 1bps YoY, and 2bps on qoq basis. Yields were lower than our forecasts especially considering that the share of equity in overall AUM has been higher on yoy basis.

- Surplus cash: Looking to utilize cash for organic as well as inorganic growth, believe organically is cheaper, only look at synergic acquisition, looking at non MF asset management space, 85% of profits are being paid out as dividend and will maintain payout ratio, will keep cash available for future investments

Shares of Nippon Life India Asset Management Ltd was last trading in BSE at Rs. 396.25 as compared to the previous close of Rs. 405.1. The total number of shares traded during the day was 294087 in over 5302 trades.

The stock hit an intraday high of Rs. 421.85 and intraday low of 388.4. The net turnover during the day was Rs. 119377945.

Source : Equity Bulls

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