Q3 FY21 Result Update - Nippon Life India Asset Management Ltd - YES Securities

(Rating: BUY, TP: Rs 426, Upside 34%)

Our View - Building Nifty return of 15% from 12%, higher other income on back of rising investment book and higher equity MTM gains along with better operating efficiencies, we have raised our earnings estimates by around 5-6% and have raised our multiple to 30x from 29x FY23E EPS leading to our target price increase from Rs364 to R426. Retain our BUY rating.

Measures to improve Scheme Performance - Steps taken to improve fund performance has yielded some results, one new FM in Fixed Income and Equity each to be added in this quarter.

Outlook on Yields - Equity yields have dropped in this quarter and are likely to see 2-3bps decline with old assets getting replaced by newer assets. Also, distribution of new NFOs is done at a slightly higher price. Within the debt fund the shift from Long term to Short term funds have impacted yields. Management believes the trend can change very fast as risk averseness amongst customers is reducing.

Margin Outlook - Pre-dominantly the expenses are fixed in nature and do not see any significant increase post normalization of the economy. Expect operating leverage benefits to start kicking in.

Shares of Nippon Life India Asset Management Ltd was last trading in BSE at Rs.317 as compared to the previous close of Rs. 314. The total number of shares traded during the day was 66185 in over 1828 trades.

The stock hit an intraday high of Rs. 326.8 and intraday low of 309.2. The net turnover during the day was Rs. 21046009.

Source : Equity Bulls

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