Emkay Global Financial Reiterates Buy Rating on Nippon Life India Asset Management, Projects Price Target of Rs 1,150

Nippon Life India Asset Management Delivers Strong Q4FY26 Performance

Nippon Life India Asset Management (NAM) has reported a healthy performance in the fourth quarter of fiscal year 2026 (Q4FY26), with the Mutual Fund Quarterly Average Assets Under Management (QAAUM) standing at Rs7.25 trillion, a 3% increase from the previous quarter. This growth is reflected in the company's market share, which rose by 24 basis points (bps) on a sequential basis.

The company's revenue yield at 41.3bps saw a marginal increase of 1bp sequentially, driven by a shift in asset mix towards commodity Exchange-Traded Funds (ETFs). As a result, revenue for the quarter stood at Rs7.39 billion, a 5% increase from the previous quarter. Notably, the EBITDA margin expanded by 200bps to 68.6%, indicating a strong operational performance.

To mitigate the impact of the new Total Expense Ratio (TER) regulation, which is expected to result in a 3-4bps impact on the company, NAM plans to pass it on to distributors. The management remains committed to focusing on growing absolute profitability in line with or higher than industry players, rather than solely monitoring yields on a basis points basis.

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Estimate Revision and Outlook

In light of the Q4FY26 developments, we have revised our estimates, resulting in a 1-2% increase in Profit After Tax (PAT) for fiscal years 2027-28E. We maintain a BUY rating and a target price of Rs1,150 for March 2027E. This implies a fiscal year 2028E Price-to-Earnings (P/E) ratio of approximately 35x.

Note: The industry average growth rates are not provided in the original text.

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