SINCE 1986

October 2024
COMPANY NAME : Nippon Life India Asset Management

BSE Code : 540767

Time Duration : 1 year

CMP : `707.60 (as on 17 Oct, 2024)

Target Price : `890

Company Profile The company recently launched Nippon India Nifty 500
Momentum 50 Index Fund (An open-ended scheme replicating/
Nippon Life India Asset Management Limited (NAM) is one of the
tracking Nifty 500 Momentum 50 Index.) and Nippon India
largest asset managers in India. It manages (directly & indirectly)
Nifty 500 Equal Weight Index Fund (An open-ended scheme
assets across mutual funds including Exchange Traded Funds,
replicating/tracking Nifty 500 Equal Weight Index.)
managed accounts, including portfolio management services,
alternative investment funds, and offshore funds and advisory Systematic Book and SIP Focus: NAM India remains focused
mandates. on growing its SIP book, with 59 per cent of its SIP AUM having
been in place for over five years, significantly higher than the
NAM India is the asset manager of Nippon India Mutual Fund’s
industry average of 28 per cent. This long-term approach
schemes. It also acts as an advisor for India-focused Equity & Fixed
positions the company for stable, recurring inflows, contributing
Income funds in Japan (launched by Nissay Asset Management),
to consistent growth in equity AUM.
and in Thailand (launched by BBL Asset Management). It also
manages offshore funds through its subsidiary in Singapore AIF and Offshore Expansion: NAM India’s AIF segment has
and, also has a representative office in Dubai thereby catering to seen significant growth, with total commitments of Rs 65.1 billion
investors across Asia, the Middle East, U.K., the U.S. and Europe. across Category II and Category III funds. The company launched
new products, including a Performing Credit AIF and a Long-Only
Small-Cap Equity AIF, with fundraising in progress. The offshore
Growth Triggers business also showed strong equity inflows, with a continued
Significant Growth in Mutual Fund AUM: The Mutual Fund focus on fundraising from international markets like Europe,
Industry’s Quarterly Average Assets Under Management Japan, and the Middle East.
(QAAUM) grew by 9 per cent QoQ and 37 per cent YoY to Rs Expansion in Individual and Corporate AUM: Individual AUM,
59 trillion in Q1 FY25. NAM India’s total AUM reached Rs 6.04 which includes retail and HNI investors, grew by 16 per cent QoQ
trillion, driven by strong equity market momentum. Equity AUM to Rs 2.98 trillion, reflecting a solid retail presence. Corporate
increased to 49.8 per cent of total AUM, compared to 49.2 per AUM also grew by 15 per cent QoQ to Rs 2.11 trillion, further
cent in the previous quarter, signalling a shift toward higher strengthening the company’s market position across various
equity allocations. segments.
Focus on Long-term Scalable Products: NAM India is opting to
scale its core mutual fund products with long-term performance
records, such as large-cap, mid-cap, and multi-cap funds. The
Industry Tailwinds
company is avoiding the launch of thematic and sectoral funds Financialization of Household Savings - India, with its large
that may be driven by short-term market trends, which often young population and middle-income households, is witnessing
exhibit less investor stickiness. a shift from traditional physical assets and fixed deposits towards
financial assets. Despite fixed deposits remaining popular, the
Growth in ETF Segment: NAM India’s Exchange Traded Funds
gap between them and capital market instruments is shrinking.
(ETFs) continue to perform strongly, with AUM reaching Rs 1.3
trillion, an increase in market share to 17.8 per cent, and an Under-penetration of Mutual Funds - India’s mutual fund
uptick in average daily trading volumes. The company holds a 60 industry has seen rapid AUM growth, doubling in four years
per cent market share in ETF folios and has a leading position in to Rs 67 lakh crore in September 2024. However, mutual fund
trading volumes on the NSE and BSE. penetration remains low at 16 per cent of GDP compared to

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DSIJ Pvt. Ltd. : Office no 211, Vascon Platinum Square, Next to Hyatt Regency, Vimannagar, Pune- 411014 I For Customer Service : 020-66663-802/803 OR [email protected]
Registered Office Address: 419-A, 4th Floor, Arun Chambers, Tardeo, Next to AC Market, Mumbai - 400034 Continued On PG 2...
CIN No. : CIN-U22120MH2003PTC139276 SEBI Research Analyst - INH000006396​ DSIJ INVESTMENT ADVISORY UNIT (CRU)
 October 2024
SINCE 1986

the global average of 74 per cent. Despite 42 million investors, by high operating leverage, and management expects continued
less than 5 per cent of the working-age population is covered, improvement as AUM grows.
signalling significant growth potential due to structural
advantages.
Valuation & Outlook
Surge in SIPs - Systematic Investment Plans (SIPs) hit a new
Nippon Life India Asset Management is trading at a P/E ratio of
milestone in September 2024, surpassing Rs 24,000 crore in
37.9x, which exceeds the industry median of 24x and is slightly
monthly contributions. With nearly 66.4 lakh new SIP registrations
above its five-year historical median of 32.3x, suggesting a
and Rs 13.81 lakh crore in AUM, the growth is largely attributed
reasonable valuation considering its growth potential. The Price/
to younger investors under 35, reflecting increased financial
Book ratio is 11.2x, the PEG ratio is 2.07, and the EV/EBITDA is
awareness.
29.4x, slightly higher than its five-year historical median of 24x.
NAM India has seen strong growth across its segments, gaining
Key Ratios market share amid buoyant markets. Its equity funds have
n P/E: 37.9x outperformed peers, driving net inflows. The company has
n ROCE: 36.2 per cent avoided launching new sectoral or thematic funds, focusing
instead on increasing SIP flows in existing products. Strong SIP
n ROE: 29.5 per cent
inflows and calibrated passive schemes are expected to boost
n Interest Coverage: 226x AUM growth and equity AUM share. The company is mitigating
n Debt/Equity: 0.00x yield pressure from lower total expense ratios by adjusting
commission structures and benefiting from higher AUM growth.

Financial Highlights
In Q1FY25, the company achieved consolidated revenue of
Conclusion
Rs 504.96 crore, reflecting a 42.58 per cent YoY increase from Nippon Life India Asset Management’s strong AUM growth,
Rs 354.15 crore in Q1FY24, and a 7.84 per cent increase from particularly in equity and passive segments, along with its focus on
the previous quarter. EBITDA rose by 56.30 per cent YoY to digital transformation and SIP inflows, positions it for sustained
Rs 316.41 crore, up from Rs 202.44 crore in Q1FY24, and an long-term success. With a strategy focused on core products,
8.83 per cent gain on a QoQ basis. Net profit saw a year-on-year expanding passive offerings, and ongoing investments in talent
increase of 41.13 per cent, reaching Rs 332.17 crore, compared and technology, NAM India is well-placed to seize opportunities
to Rs 235.37 crore in Q1FY24, while a 3.05 per cent QoQ in domestic and international markets. Its disciplined approach
decrease. to product launches, profitability, and commitment to digital and
retail penetration will drive its growth in the asset management
The EBITDA margin marginally improved by 550 basis points
industry. Hence, we recommend buying the stock at Rs 707.60
YoY and 57 basis points QoQ to 62.66 per cent. The net profit
with a target price of Rs 890, expecting an upside potential of 25
margin contracted by 68 basis points YoY to 65.78 per cent, and
per cent.
739 basis points QoQ. The company’s profitability is supported

Inc/Exp Statement (Consolidated) (Rs. in Crores )

Description Mar - 24 Mar - 23 Mar - 22 Mar - 21 Mar - 20
Net Sales 1,643.22 1,349.82 1,306.63 1,062.14 1,202.98
Total Income 2,037.61 1,517.48 1,536.15 1,419.34 1,289.14
Total Expenditure 649.75 555.98 516.45 504.62 690.41
PBIDT 1,387.86 961.50 1,019.70 914.72 598.73
PAT 1,106.25 722.93 743.36 679.39 415.76
Dividend % 165.00 115.00 110.00 80.00 50.00
Adj. EPS(Rs) 17.58 11.61 11.96 11.04 6.78
Continued On PG 3 ...

Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
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DSIJ Pvt. Ltd. : Office no 211, Vascon Platinum Square, Next to Hyatt Regency, Vimannagar, Pune- 411014 I For Customer Service : 020-66663-802/803 OR [email protected]
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CIN No. : CIN-U22120MH2003PTC139276 SEBI Research Analyst - INH000006396​ DSIJ INVESTMENT ADVISORY UNIT (CRU)
 October 2024
SINCE 1986

Quarter On Quarter Rs. (in Crores)

Particulars June - 24 Mar - 24 QoQ Var % June - 23 YoY Var %
Net Sales 504.96 468.27 7.84 354.15 42.58
Total Expenditure 188.55 177.52 6.21 151.71 24.28
PBIDT (Excl OI) 316.41 290.75 8.83 202.44 56.30
PAT 332.17 342.63 -3.05 235.37 41.13
PBIDTM% (Excl OI) 62.66 62.09 0.92 57.16 9.62
PBIDTM% 88.56 81.80 8.26 90.16 -1.77
PATM% 65.78 73.17 -10.10 66.46 -1.02
Adj. EPS(Rs) 5.26 5.44 -3.31 3.78 39.15

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Continued On PG 4...

Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
“Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors

DSIJ Pvt. Ltd. : Office no 211, Vascon Platinum Square, Next to Hyatt Regency, Vimannagar, Pune- 411014 I For Customer Service : 020-66663-802/803 OR [email protected]
Registered Office Address: 419-A, 4th Floor, Arun Chambers, Tardeo, Next to AC Market, Mumbai - 400034
CIN No. : CIN-U22120MH2003PTC139276 SEBI Research Analyst - INH000006396​ DSIJ INVESTMENT ADVISORY UNIT (CRU)
 October 2024
SINCE 1986

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DSIJ Pvt. Ltd. : Office no 211, Vascon Platinum Square, Next to Hyatt Regency, Vimannagar, Pune- 411014 I For Customer Service : 020-66663-802/803 OR [email protected]
Registered Office Address: 419-A, 4th Floor, Arun Chambers, Tardeo, Next to AC Market, Mumbai - 400034
CIN No. : CIN-U22120MH2003PTC139276 SEBI Research Analyst - INH000006396​ DSIJ INVESTMENT ADVISORY UNIT (CRU)
 October 2024
SINCE 1986

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Analyst # INH000006396.
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responsible for any losses incurred (if any) by acting on the recommendations.
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CIN No. : CIN-U22120MH2003PTC139276 SEBI Research Analyst - INH000006396​ DSIJ INVESTMENT ADVISORY UNIT (CRU)