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Prabhudas Lilladher Report
We initiate coverage on Nippon Life India Asset Management Ltd. with ‘Buy' rating given-
consistent equity outperformance translating to improved net flows and in-turn market share gains,
focus on stronger investment process and risk management and
robust retail franchise as indicated by enhancing SIP assets under management and healthy addition of unique investors plus folios over FY19 to 9M FY24.
Significant under-penetration in Indian mutual fund industry suggests strong growth prospects of asset management company space which could benefit Nippon Life (fourth largest player).
We expect healthy core earnings compound annual growth rate of 23.4% over FY24-26E led by higher than industry equity AAuM growth and operational efficiency.
The stock is valued at 25 times FY26E core earnings per share implying 32% discount to HDFC AMC.
We assign multiple of 30 times to arrive at a target price of Rs 610. Initiate with ‘Buy'.
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