Analyst Recommends Buying Nippon Life India Asset Management, Sets Target Price at Rs 1050

Nippon Life India Asset Management Reports Strong Quarter

Nippon Life India Asset Management (NAM) has posted a robust performance in the latest quarter, with core income reaching INR 7.4 billion, a 5.6% beat over expectations. This significant increase was driven by a 3.2% rise in revenue.

Despite a sharp equity correction in March 2026, NAM's blended yield saw a 0.5 basis point (bp) QoQ increase to 40.7bps, surpassing the previous estimate of 39.5bps. This improvement was largely attributed to the strong growth in Quarterly Average Assets Under Management (QAAuM) in higher-yielding gold/silver ETFs, which accounted for 12.2% of the total QAAuM in the quarter, up from 7.9% in the previous quarter.

NAM's market share in Systematic Investment Plans (SIPs) and net equity flows remained higher than its stock equity AuM market share. Specifically, the company's SIP market share stood at 11-12%, while its net equity flows accounted for 10% of the market in fiscal year 2026. In contrast, its stock equity AuM market share was lower at 7.2% in fiscal year 2026.

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Looking ahead, the company has announced a new Employee Stock Option Plan (ESOP) scheme, which is expected to result in an average 2% increase in operating expenses for fiscal years 2027 and 2028. However, this rise in opex will be offset by an upgrade in revenue due to higher ETF yields, leading to an average 2.3% increase in core Profit After Tax (PAT).

Outlook and Recommendation

Based on this positive outlook, we have tweaked our multiple to 35x on March 2028 core earnings per share (EPS) from 33x and raised our target price to INR 1,050 from INR 985. We retain a 'BUY' recommendation for Nippon Life India Asset Management.