ICICI Direct has given Hold recommendation for Nippon Life India AMC with a target price of Rs. 360 in its research report issued on Apr 29, 2021
ICICI Direct’s research report on Nippon Life India AMC
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.
We value the business at ~7.6% of FY23E MF AUM and revise our target price Rs 360 (earlier Rs 300). We maintain HOLD.