Nippon Life Gets 'Buy' From Motilal Oswal After Q3 Results, Sees 30% Upside — Here's Why

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Motilal Oswal Report

Nippon Life India AMC Ltd.’s operating revenue came in at Rs 5.9 billion (in line), resulting in a growth of 39% YoY and 3% QoQ. Yields declined to 41.3 basis points in Q3 FY25 from 41.6 bp in Q2 FY25 and 44.8 bp in Q3 FY24. For 9M FY25, revenue came in at Rs 16.6 billion, recording a growth of 42% YoY.

Total opex grew 23% YoY and 3% QoQ to Rs 2 billion. Resultant Ebitda stood at Rs 3.9 billion in Q3 FY25, +49% YoY (in line). Ebitda margin improved 440 bp YoY to 65.6%. For 9MFY25, Ebitda grew 53% YoY to Rs 10.8 billion.

PAT stood at Rs 3 billion in Q3 FY25; PAT rose 4% YoY but declined 18% QoQ (9% miss), mainly due to the MTM impact on investments, which led to lower-than-expected other income. In 9MFY25, PAT grew 29% YoY to Rs 10 billion.

Investments in talent and technology are expected to continue, and management has guided an expense growth of 15-17%, excluding ESOP.  We cut our FY25/FY26/FY27 earnings estimates by 4%/4%/3% mainly on account of lower-than-expected other income. However, due to continued strong fund performance, upside from international flows, and rising market share, we reiterate our Buy rating on the stock with a target price of Rs 850, based on 36 times Sep’26E Core EPS.

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