Buy Nippon Life India Asset Management; target of Rs 1300: Emkay Global Financial

Moneycontrol • 5 days ago

Original source

Key Investment Pillars

  • Nippon Life India Asset Management (NAM) has a strong brand and retail franchise, with the largest investor base in the industry at 24.3mn unique investors.
  • The company's MF QAAUM grew ~5% qoq in 2Q, driven by healthy flows across traditional large-cap, mid-cap, multi-cap, and multi-asset allocation funds.
  • NAM's EBITDA margin improved by 130bps sequentially to 67.5%, led by largely flat employee costs and lower 'other expenses'.
  • The company continues to invest in technology, brand, digital, and people, while maintaining opex growth guidance of ~18-20%.

Thesis Validation Checklist

  • Investors should watch for NAM's ability to maintain its market share and AUM growth, driven by its strong brand and retail franchise.
  • The company's yield compression and its impact on revenue should be monitored, as well as the growth of its ETF business.
  • NAM's employee costs and other expenses should be tracked, as they have a significant impact on the company's EBITDA margin.
  • The company's ability to maintain its opex growth guidance and invest in technology, brand, digital, and people should be observed.