Add Nippon Life India Asset Management, target price Rs 425: HDFC Securities

HDFC Securities has add call on Nippon Life India Asset Management with a target price of Rs 425. The current market price of Nippon Life India Asset Management is Rs 320.8. Time period given by analyst is one year when Nippon Life India Asset Management Ltd. price can reach defined target.

Nippon Life India Asset Management Ltd., incorporated in the year 1995, is a Large Cap company (having a market cap of Rs 19973.00 Crore) operating in Financial Services sector.

Nippon Life India Asset Management Ltd. key Products/Revenue Segments include Investment Management & Advisory Fees and Income From Portfolio Management Services for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 372.44 Crore, up .95 % from last quarter Total Income of Rs 368.93 Crore and up 2.90 % from last year same quarter Total Income of Rs 361.96 Crore. Company reported net profit after tax of Rs 174.84 Crore in latest quarter.

Investment Rationale
Nippon Asset Management (NAM) printed sequentially flat core revenues at INR3.38bn, in line with estimates. However, revenue yields continued to trend lower, consistent with industry trends. Market share in the high-margin equity segment moderated further (-9bps QoQ) and continues to remain a structural medium-term concern. The brokerage expects NAM to focus on improving its performance in order to recoup its lost market share. Driven by cost optimisation, it expects NAM to deliver FY22-24E revenue/NOPLAT CAGRs of 11%/15%. The brokerage maintains ADD rating with an unchanged target price of INR425 (33x Sep-23E EV/NOPLAT + Sep-22E cash and investments). The stock is currently trading at FY23E/24E EV/NOPLAT of 27.1/22x and P/E of 25.3/21.6x.

Promoter/FII Holdings
Promoters held 73.8 per cent stake in the company as of 31-Mar-2022, while FIIs owned 13.32 per cent, DIIs 2.2 per cent.