We expect NAM to post an FY21-23E revenue/PAT CAGR of 13.7/15.8% and retain a REDUCE rating with TP of Rs 280 i.e. at 36x (20% discount to HDFCAMC's multiple) FY22E NOPLAT + cash and investments. Any signs of improving performance and market share will be key re-rating drivers for the stock. While we remain concerned about the loss of market share in both debt and equity assetsdown 332/275bps since Mar-19 to 7.5/6.8%we believe that post ownership change, NAM stands to benefit from increased credibility to raise HNI/institutional capital. We expect the company to focus on improving investment return performance and gradually recoup part of its lost market share, although this journey would neither be easy nor inexpensive.

Nippon Life India Asset Management Ltd (NAM) has reported revenue at Rs2,331mn, down 28% YoY/15% QoQ and 4% below our estimate. Decline in revenue was due to drop in equity's share and migration of customers from higher fee credit risk fund to overnight and liquid funds. Opex was down 27% YoY but up 11% QoQ due to one-offs in 4QFY20, but was broadly under control. Expenses such as travel, stationery, distribution and new branch costs are expected to remain absent in the short term. EBITDA at Rs1,071mn was down 30% YoY/34% QoQ and 8% below estimate. PAT grew by 24% YoY to Rs1,561mn, supported by other income of Rs1.03bn. During 4QFY20, other income was negative at Rs1.25bn due to MTM loss on corporate level financial...

Nippon Life Asset Management (NAM) reported a Rs 250bn sequential increase in Q1FY21 AUM, largely due to the MTM effect.

Nippon Life India AMC (Nippon) reported weak earnings, primarily led by MTM losses on investments. Regressive AUM growth, amid Covid-19, kept the topline under pressure with the outlook being a bit uncertain. Industry AUM declined to | 22.3 lakh crore as of March 2020 vs. | 26.5 lakh crore as of December 2019. Equity segment saw a decline of ~24% QoQ to | 8.3 lakh crore, led by a correction in markets. Debt, liquid schemes saw ~7%, ~11% QoQ, respectively, decline in AUM due to outflows in the...

Nippon Life India Asset Management Ltd (NAM) has reported a weak 4QFY20 with revenue and PAT coming in 10% and 97% below our estimates, respectively. The key factor behind such a weak performance was the correction in the equity capital markets during the quarter. As a result, QAAUM was nearly flat QoQ at Rs1,996bn. Total revenue was down 20% YoY/9% QoQ. What further aggravated the P&L; was the MTM loss worth ~Rs1.5bn on the investment book in the corporate balance sheet. The loss, which was only notional in nature, has since been reversed, to an extent, as markets have recovered post 31st March 2020. Despite the weak topline, we commend the company's ability to manage expenses which were collectively down 33% YoY/36%...

NAM reported PAT of Rs 3.7cr, down from Rs 151/149cr YoY/QoQ on account of MTM hit. Other income was negative due to sharp correction on investments in equity AUM resulting in gross MTM loss of Rs 149cr.

We retain BUY with a TP of Rs 288 (36x Mar-22E NOLPAT + cash) NAM printed 4QFY20 operating profits of Rs 1.52bn (+9.4/11.9% YoY/QoQ, 18.1% beat). Beat was primarily driven by lower expenses (-44.1/-27.7% YoY/QoQ). Large MTM loss (due to sharp correction on investments in equity AUM) on investment book resulted in negative other income of Rs 1.25bn and caused APAT to decline to just Rs 37mn (-97.3/-97.5% YoY/QoQ).

The current situation demands for investment opportunities in various stocks/sectors that one can look into. Due to COVID 19 pandemic, valuations for several mid to large cap stocks corrected significantly making them lucrative. And expect to remain volatile unless issue comes under control. Thus, at this juncture when market shambles and sentiments still fragile, it is prudent to invest in a well-diversified portfolio consisting of...

We are concerned about the loss of investor confidence which debt schemes face given significant write-downs/offs on exposures to stressed corporates. While we are hopeful of the market share re-gain, we believe the recovery will take longer than street expectations. Lastly despite our positive bias towards Nippon Life as sole promoter, increased credibility to raise HNI/institutional capital, and valuation discount (26.8% on FY21E P/E) to HDFCAMC, we retain NEUTRAL with an unchanged TP of Rs 321 (30x Dec-21E NOLPAT + cash). NAM printed a broadly in-line 3QFY20, with core operating profits of Rs 1.36bn (+24.7/0.2% YoY/QoQ, 2.3% miss). Higher other income (79.7% beat!) drove profitability to Rs 1.49bn (+36.3/21.7% YoY/QoQ, 13.8% beat).

Nippon India AMC reported a broadly stable set of numbers with flat AUM growth but supported by healthy operational performance. QAAUM growth was at | 204370 crore (up 1% QoQ) on the back of growth in liquid (up 200 bps QoQ) and equity AUM (up 100 bps QoQ). Share of equity in AUM was at 44% with non-equity at 66%. SIP inflow witnessed a marginal dip at | 838 crore in Q3FY20 compared to | 842 crore in Q3FY19. Sequential flat revenue from operations at | 286 crore due to sluggish AUM growth, was offset by strong growth in other income (up 140% QoQ at | 57...

Topline weaker than expected but AUM decline reverses Nippon Life India Asset Management Ltd (NAM) reported its 3QFY20 results with the key pointers being: (1) Full stop to the AUM decline (2) Revenue traction remains weak (See comprehensive conference call takeaways on page 2 for significant incremental colour). Per se, on the key financials, NAM posted MF AUM decline of 12% YoY at Rs1,997bn, Net revenue decline of 13% YoY at Rs3,031mn, EBITDA growth of 23% at Rs1,453mn and PAT growth of 36% YoY at Rs1,493mn. We have revised our estimates for FY20/FY21/FY22 and retained Accumulate rating on NAM, revising our target price to...

Past the re-rating, we now await pick-up in business momentum Since initiating our coverage on the AMC sector (link here) 2 months ago, RNAM's stock has rallied about 57%. Since 2QFY20's business performance was below expectations, driven by a sharp decline in AUM (-15.7% YoY/-6.9% QoQ), we believe the stock performance is mostly explained by the re-rating effect on account of Nippon buying out Reliance Capital's stake and consequently becoming a 75% holder in the company. We had highlighted in our initiating coverage that this transaction would be a positive development for RNAM. While it may have been the case in terms of stock performance, we are yet to see a meaningful and sustained pick up in...

RNAM posted MF AUM decline of 16% YoY to Rs 188,600cr led by loss of business on the institutional/ HNI front. Standalone Net revenue declined 25% YoY, Operating profits grew 3% and PAT grew 22% YoY to Rs 134cr.

We are concerned about the loss of investor confidence which debt schemes face given significant write-downs/offs on exposures to stressed corporates. Lastly, the macro environment remains challenging and thus despite our positive bias towards Nippon Life as sole promoter, increased credibility to raise HNI/institutional capital, and valuation discount (26.7% on FY21E P/E) to HDFCAMC, we retain NEUTRAL with a revised Sep-20E TP of Rs 260 (24x Sep-21E NOLPAT + cash). RNAM printed an in-line 2QFY20 with revenues at Rs 3bn (23.2/7.7% YoY/QoQ), and operating profit at Rs 1.35bn (5.2/-6.4% YoY/QoQ, -1.9% vs. est.). We remain concerned of the 13.3% QoQ decline in debt QAAUM.

Institutional and HNI businesses continue to decline Reliance Nippon Life Asset Management Limited (RNAM) reported its 2QFY20 results with the key pointers being: (1) Institutional and HNI businesses continue to be of concern, retail continues strong (2) Share of equity increases 100 bps QoQ to 43%. (See comprehensive conference call takeaways on page 2 for significant incremental colour). Per se, on the key financials, RNAM posted MF AUM decline of 16% YoY at Rs1,886bn, Net revenue decline of 23% YoY at Rs3,002mn, EBITDA growth of 4% at Rs1,435mn and PAT growth of 21% YoY at Rs1,367mn. We have revised our estimates for...

We are concerned about the loss of investor confidence which debt schemes face given significant write-downs/offs on exposures to stressed corporates. Additionally, given the current inter-promoter deal structure, we believe an OFS by RCAP is imminent. Lastly, the macro environment remains challenging and thus despite our positive bias towards Nippon Life as sole promoter, increased credibility to raise HNI/institutional capital, and valuation discount (37% on FY21E P/E) to HDFCAMC, we cut multiple to 22x (from 26x) to Jun-21E NOPLAT and downgrade stock to NEUTRAL with a revised Jun-20E TP of Rs 235 (22x Jun-21E NOLPAT + cash). While 1QFY20 revenues were in-line, RNAM printed a 14.1/-9.2% YoY/QoQ APAT of Rs 1.25bn, largely due to lower other income.

Retail AUM trends remains strong: During Q4FY19, overall MF AUM for RNAM remained flat as growth in equity schemes and ETFs was offset by a decline in debt and liquid AUM.

We are encouraged by the cost control shown in 4QFY19 and hope that it continues into the future. Additionally, we are excited by the prospects of exit of ADAG as promoter, which we believe will aid fund raising from HNIs and institutions. We revise our FY20E/21E EBIT estimates upwards by 14.5/9.1%. Led by a 47.1/25.6% YoY/QoQ drop in other expenses RNAM reported an EBITDA of Rs 1.14bn (+4.5/19.7% YoY/QoQ) and 17.7% above our estimates. We expect exit of ADAG to positively impact both performance. We value RNAM at 26x on its FY21E NOPLAT + value of investments to arrive at TP of Rs 254 (+29.7%) i.e. 5.5% of FY21E AUM.

RNAM reported standalone PAT of Rs 110.2cr (down 14% YoY) and revenues of Rs 334.1cr (down 15% YoY) led by moderation in yield and decline in AUM growth. While some moderation in core yields was expected with RNAM moving to full trail model of commission (from earlier upfront commission model)

We have a BUY rating on RNAM with a TP of Rs 200 (+30.1%). Our TP implies a FY20/21E P/E of 23.6/20.2x. Private life insurers individual NBPs grew 17% YoY to Rs 46bn in Jan-19 (FY19TD growth 15%). Mutual fund equity (ex. arbitrage and ETF) net inflows on the other hand declined to a 31-month low of Rs 52bn in Jan-19 i.e. 51% below FY19TD monthly average of Rs 106bn.