About the Company
Nippon Life India Asset Management Limited (NAM India) is the asset manager of Nippon India Mutual Fund (NIMF). Nippon Life Insurance Company is the promoter of NAM India and currently holds 75 of its total issued and paid-up equity share capital while Reliance Capital holds 0.93% of shares in the company. Equity Shares of NAM India are listed on BSE Limited and the National Stock Exchange of India Limited.
Q4 FY23 Updates
Financial Results & Highlights
Detailed Results:
- Monthly SIPs touched an all-time high of INR 143 billion – an increase of 16%, while SIP folios rose by 20% to 64 million.
- AUM increased by 3.5% YoY to INR 2,932 billion.
- Systematic AUM rose by 15% to INR 673 billion
- The company’s annualized systematic transaction book is at INR 110 billion.
- Quarterly flows increased by 25% to INR 32 billion.
- On a gross basis, 2.6 mn systematic folios were added in FY23, making the total investor base 19.6 mn.
- In the ETF segment, the company manages an AUM INR 700 billion and has a market share of 13.7%. The Gold ETF is the biggest fund in this category with AUM of INR 74 billion in assets.
- Over 908,000 purchases were executed through digital assets – an increase of 5%.
- For the quarter ended December 31, 2022, profit after tax was INR 1.98 billion – an increase of 13%.
- Operating profit was at INR 2 billion.
- In FY23, NAM India distributed its highest ever dividend with a payout ratio of 100%.
- Tech FoF is in advanced stage of deployment. Nearly 70% of commitment raised has been deployed across 11 VC funds
Investor Conference Call Highlights :
- The industry AUM grew by 5.5% in the year and is currently at Rs. 40.51 lakh crores, which is a historic high.
- Investor interest in investing through systematic investment plans was very high with the SIP contribution for the year being at 1.56 lakh crores, 25% higher than last year, for the industry.
- The monthly SIPs touched an all-time high of Rs. 14276 Crores per month while SIP folios were at 63.6 million, rising by 20%.
- The company’s equity market share excluding ETF has been stable for the past three quarters and is currently at 6.19%. Share of equity assets rose to 44% of total assets compared to 42% last year.
- The company’s B30 AUM is at Rs. 55,680 crores which has increased 16.4% YoY.
- The company has performed well in the HNI category, its AUM increased by Rs. 15,994 Cr from Rs. 77,289 Cr which is up 25% YoY, and market share increased by 66 basis points.
- The company continues to be the largest ETF player with an AUM of Rs. 70,024 Cr with a market share of 13.74%.
- The company’s share in the industry ETF folios is 61%. It has a 70% share of ETF volume on both NSE and BSE.
- Digital purchase transaction rose up to 33 lakhs from 30 lakhs last year. Digital channel contributes 57% of the company’s new purchase transactions.
- The management sates that on a full year basis, the yields have moved down from 44 basis points to 42 basis points on the NAV side.
- The yields have gone down YoY mainly due to three factors, replacement of old assets by new assets, cost of acquisition of new assets being higher than old assets and increase in sizes.
- Other income fell this quarter due to impact in the company’s fixed income schemes.
- The company’s yields stand as the follows, Equity yields in the range of high 70s to low 80s, Debt side around 23 to 30 basis points, and Liquid close to 15 to 20 basis points.
- The company has seen its HNI market share go up by 66 basis points, with an overall increase in AUM of 25% compared to industry AUM of 11%.
- The management states that this year the company has almost reached 100% dividend payout, which would remain in the 60%-100% range depending on evaluation of the situation by the board.
- The management expects its effective tax rate to be 20%-23% in the future, depending on the income from other sources.
- The net flow market share has stabilized and is higher than the AUM market share for the same period.
- The management states that 1 in 3 investors in Indian Mutual Fund stays with Nippon due to their 70% market share in ETFs. There is also growth on the passive side led by many first time investors.
- The management continues to explore inorganic opportunities, and plans to have higher focus on the non-mutual fund business during the next 3-4 years of the company.
- The management acknowledges that the financial year has not been favourable due to various reasons such as maturing close-ended funds, slowdown in real estate offerings and delayed launch of new funds.
- The management outlines three areas of opportunity for the non-mutual fund business as domestic fund raising(including real estate and long-short funds), international funds with a focus on attracting investors from Japan, and exploring inorganic opportunities
- The management states that Government business (postal life) has mandated low margin fees, accounting for around Rs. 60,000 Crores in assets.
- PMS and AIF net retention is around 100 basis points, while the offshore business ranges from 33 to 67 basis points depending on the mandate type.
- The offshore business represents approximately $1.8 billion, with commitment in AIF around 800 million, primarily serving institutional mandates. Net realizations on the retail and offshore sides exceed 100 basis points.
- The management discusses the direction of yields, aiming to maintain current levels in the range of 40 to 45 basis points on net yields for fixed income, with scope for improvement due to higher net carry.
- Competitive pressure on NFOs has eased, as regulations allow only one scheme per category, and investors and distributors have learned from past experiences, preferring established and performing categories.
- The management states that Nippon’s focus is not to launch many NFOs, it is consolidating and scaling up based on the performance of existing funds.
- The management explains that recent regulations mainly affect investments beyond three years, while shorter-term debt investments remain unaffected. April flows in the industry have been similar to the previous year, with around 60,000 odd Crores, indicating stability.
- The management states that other expenses are expected to grow in line with AUM, with potential operating leverage as AUM increases. And the impact of GST and brokerages on the TER is uncertain, and the company will adapt to regulations once they are finalized.
- The company does not plan to launch NFOs unless they offer a unique product with differentiated returns.
- The overall other expenses are currently in the range of about 17 to 18 basis points of the current AUM.
Analyst’s View
Nippon Life India Asset Management is one of the leading asset management companies in India. Nippon Life India Asset Management has a strong track record of performance, with many of its mutual funds delivering attractive returns to investors. The company has a robust distribution network, with a presence in over 300 cities in India. AMCs are increasingly losing control over the customer interaction layer of the business. This would deplete their stickiness with customers, while these digital partners accrue more power. This trend can hurt profit margins.
However, growing financial awareness, differentiated and transparent product suite and innovative digital strategies are expected to be the key drivers for the growth of the industry in future as well.
The company’s ETF average daily volumes across key funds remain far higher than the rest of the industry. Nippon’s digital-centric strategies are also the keystone for sustainable growth and profitability.
Q3 FY23 Updates
Financial Results & Highlights
Detailed Results:
- Monthly SIPs touched an all-time high of INR 136 billion – an increase of 20%, while SIP folios rose by 25% to 61 million.
- AUM increased by 3% to INR 2,928 billion.
- Systematic AUM rose by 15% to INR 583 billion
- The company’s annualized systematic transaction book is at INR 123 billion.
- Quarterly flows increased by 45% to INR 29 billion.
- On a gross basis, 561,000 systematic folios were added in Q3.
- In the ETF segment, the company manages an AUM INR 683 billion and has a market share of 14%. The Gold ETF is the biggest fund in this category with AUM of INR 67 billion in assets.
- Over 902,000 purchases were executed through digital assets – an increase of 19%.
- For the quarter ended December 31, 2022, profit after tax was INR 2.1 billion – an increase of 18%.
- Operating profit was at INR 2 billion.
- Operating profit, as a ratio of average assets under management, was 28 basis points in Q3 FY23 as compared to 26 basis points in Q2 FY23
- In FY22, NAM India distributed its highest ever dividend with a payout ratio of 96%.
- Gross realization has been 43 basis points in the Q3 FY23, and it was 42 basis points last quarter.
Investor Conference Call Highlights
- The management stated that in Q3, Indian equity markets remain range bound with a positive bias driven by strong corporate earnings, superior growth, economic growth versus peers and, peaking of inflation expectations.
- The management believes that with the ongoing global uncertainties, FII outflow and a weak INR USD outlook also impacted the growth momentum and led to some volatility but despite all this the asset management industry maintained its growth momentum, driven by higher retail awareness and improved access of mutual fund products across the length and breadth of the company.
- The management stated that the industry assets rose by 5%, mainly driven by higher equity and ETF assets.
- The base for unique investors grew by 20% to 37 million.
- The management stated that they added 2 million folios the last 9 months and continue to have the largest base in the mutual fund industry.
- The company’s share of industry unique investors was largely stable at 36% with a base of more than 13 million investors.’
- The management stated that in volatile markets, folios with lower ticket size have demonstrated longer vintage and better stickiness.
- The management stated that 14% of their SIP folios have continued for more than 5 years against industry which is 11%.
- The company’s share in industry’s ETF folios rose to 61%. . In Q3, it added 137,000 investors and accounted for 99% of the total ETF folio additions in the industry.
- The company rolled out the Nippon India Mutual Fund WhatsApp Channel, a real-time comprehensive transaction and service suite for their investors.
- The management stated that the Business Easy 2.0 app is aimed at driving more meaningful engagement, attention and growth through advisory, detailed analytics and smart insights.
- In Q3, the digital platform contributed to 59% of the company’s total new purchase transactions.
- The management stated that Nippon India Mutual Fund has a well diversified enabled distribution base with a wide presence through 270 locations across the country.
- The company began to integrate ESG aspects into various areas of planning, operation, fund management, risk and governance.
- The management stated that they have been able to marginally increase its yields on the debt and the ETF side, which has helped it to maintain the run rate.
- The management stated the 3 reasons for the outflows debt funds across the industry
- To avoid any MTM losses that may rise out of returns
- There is some competition from bank deposits because bank deposit rates have moved up
- Because of the rising interest rates, a lot of corporate treasuries have preferred to repay their loan credits to the banks.
- The management stated that most of the company’s money has come from B30 cities.
- The management stated that their SIP book has grown from roughly around INR 650 crores to more than INR 1,000 crores per month. So all those things aggregate into equity sales. And the margin expansion is happening because of that.
- The management stated that on the SIP gross folio share, the company used to be at 5.4% of the industry and they are now 8.5%. On a net basis, they almost have 12% incremental folio share.
- The management stated that the small cap fund, which has doubled in the last 2 to 3 years, the total TER drop because of these reverse telescopic rates, the company’s TER chargeability has gone down by 15 basis points.
Analyst’s View
Nippon Life India Asset Management is one of the leading asset management companies in India. Nippon Life India Asset Management has a strong track record of performance, with many of its mutual funds delivering attractive returns to investors. The company has a robust distribution network, with a presence in over 300 cities in India. AMCs are increasingly losing control over the customer interaction layer of the business. This would deplete their stickiness with customers, while these digital partners accrue more power. This trend can hurt profit margins. However, growing financial awareness, differentiated and transparent product suite,s and innovative digital strategies are expected to be the key drivers for the growth of the industry in future as well. The company’s ETF average daily volumes across key funds remain far higher than the rest of the industry. Nippon’s digital-centric strategies are also the keystone for sustainable growth and profitability.
Q2 FY23 Updates
Financial Results & Highlights
Standalone Financials (in Crs) | ||||||||
Q2FY23 | Q2FY22 | YoY % | Q1FY23 | QoQ % | FY22 | FY21 | YoY% | |
Sales | 309 | 304 | 1.64% | 294.6 | 4.89% | 1428.42 | 1325.66 | 7.75% |
PAT | 196.6 | 200.4 | -1.90% | 121 | 62.48% | 711.21 | 649.39 | 9.52% |
Consolidated Financials (in Crs) | ||||||||
Q2FY23 | Q2FY22 | YoY % | Q1FY23 | QoQ % | FY22 | FY21 | YoY% | |
Sales | 331.6 | 327.9 | 1.13% | 316.1 | 4.90% | 1535.63 | 1419.34 | 8.19% |
PBT | 267.6 | 282.8 | -5.37% | 154.6 | 73.09% | 988.67 | 877.03 | 12.73% |
PAT | 206.1 | 213.7 | -3.56% | 114.1 | 80.63% | 743.37 | 679.39 | 9.42% |
Detailed Results:
- Revenues were flattish with being up 1.13% YoY and 4.9% QoQ in consolidated terms.
- Profits have -3.56% growth YoY but have grown by 80% QoQ.
- FY22 performance was decent with revenue growth of 8.19% YoY and PAT growth of 9.42% YoY.
- AUM increased by 7% to Rs. 2,851 billion or 2.85 lakh crores.
- The company added 1.6 million folios in H1.
- The company’s share of the industry’s unique investors was stable at 37% with a base of more than 13 million investors.
- Nippon India Mutual Fund annualized systematic transaction book is at Rs. 108 billion.
- Quarterly flows increased by 36% to Rs. 26 billion.
- On a gross basis, over 481,000 systematic folios were added in Q2.
- The company’s systematic AUM rose by 11% to Rs. 555 billion.
- 53% of the company’s SIP AUM has continued for over five years vis-à-vis 22% for the industry.
- 14% of SIP folios have continued for more than five years as against the industry average of 10%.
- In the ETF segment, the company manages an AUM of Rs. 638 billion and has a market share of 14%. The company’s share in the industry’s ETF folios rose to 60%. In Q2, the company added 108,000 investors and accounted for 92% of the total industry’s ETF additions.
- As of September 2022, the company has over 87,200 distributors impaneled with it. The MFT base rose to 87,000, with the addition of nearly 1,700 distributors in this quarter.
- Operating profit, as a ratio of average assets under management, was 26 basis points in Q2 FY2023 as compared to 25 basis points in Q1 FY2023.
- In FY2022, NAM India distributed its highest-ever dividend with a payout ratio of 96%.
Investor Conference Call Highlights
- Currently, less than 3% of the population invests in mutual funds. In the last 24 months alone, the base of unique investors grew to 36 million – an increase of 69%.
- Monthly SIP flows touched an all-time high of Rs. 130 billion – an increase of 67%, while SIP folios increased to 58 million – a rise of 75%
- Management stated three reasons for the better realization in this quarter.
-
- Due to better asset mix, i.e. higher equity share
- Marginal increase in realization of debt schemes, as the yields go up in these categories, the company’s propensity to charge slightly higher improves
- Improvement in the realization of ETF due to some regulatory interventions of requiring only one basis point to be kept aside for investor education.
- NAM has collaborated with the DWS group to provide portfolio management and advisory services in the European market for Indian government bonds.
- The launch of the product with DWS is in line with our strategy to grow our non-mutual fund business and offshore business.
- The company has no plan to launch new schemes as of now..
- For different distributors the company shares the different amount of fees, which range between 55 to 70% of our TER.
- Management stated SIP inflow channel mix:
60% from MFDs
40% from Fintech partners
Analyst’s View
Nippon India Life Asset Management is one of the leading asset managers in the country. The company has done well to bounce back after the rebranding last year. The company saw a flat performance in Q2. The company continues to have a good hold in the ETF space which has seen good growth in market share in terms of ETF folios to 60%. The company is focused on expanding digitally and will not be doing a big physical branch expansion going forward. The management has also stated that the new products should have lower yields than before but the company can make up for the drop with operating leverage at large scale. It remains to be seen whether the company will be able to maintain its hold over the rapidly rising ETF space and how the landscape of the mutual fund industry changes with the influx of new tech-driven players like NAVI & Zerodha. Nonetheless, given the company’s market positioning and its competitive advantage in the ETF and AIF space, Nippon Life India Asset Management is a must-watch stock for every investor interested in the AMC space.
Q1 FY23 Updates
Financial Results & Highlights
Detailed Results:
- Revenues were flattish with being up 5% YoY in Q1. Profits for the company fell -29% YoY.
- As of 30th June 2022, AUM was at Rs 3.31 trillion.
- Mutual Fund QAAUM was at Rs 2,794 billion which was up 16% YoY.
- Mutual Fund QUAAUM market share was at 7.4%, up 16 basis points YoY in Q1.
- NIMF now has the largest investor base in the industry. It added over 1.3 million investor folios in Q1 totalling upto 18 million folios.
- Equity assets were at 42% of total AUM. Retail Assets were lower YoY at is 27% of NIMF AUM.
- Fixed income (Debt + Liquid) assets have decreased largely YoY and account for 37% of total AUM.
- Digital transactions now account for 55% of total purchases. Digital lumpsum registrations contributed to 63% of the total new lumpsum purchases registered in Q1.
- The company enjoys a market share of 14% in ETF space with an AUM of Rs 601 bn. It also has a volume share of 74% and a 60% share of folios in the ETF space.
- B30 assets accounted for 11.7% of overall MF AUM.
- The overall distribution mix was 56% direct and 44% distributed assets. In distributed assets, Banks were at 22%, National Distributors were at 20% and MF Distributors were at 58%.
- The offshore business has an AUM of Rs 101 bn.
- NIAIF has raised commitments of Rs 47 bn as of June ’22.
Investor Conference Call Details
- The quarter saw significant market volatility owing to the continued geopolitical uncertainty, high crude oil prices, increasing inflation and weakness in currency coupled with FII outflows. In the past too, we have witnessed that global sentiment and local economic indicators had an impact on the Indian asset management industry.
- The industry assets declined marginally by 2% in this quarter after witnessing a positive momentum for seven quarters. The decrease was mainly due to the fall in equity as well as fixed income assets, while ETFs rose.
- As on June 2022, no category of equity in the company has more than 16% of the total assets. Majority of the funds are jointly-managed, and no individual fund manager manages more than 23% of equity assets.
- In volatile markets, folios with lower ticket size have demonstrated longer vintage and better stickiness. 13% of SIP folios have continued for more than five years as against the industry number of 9%.
- The Gold ETF of Nippon is the biggest fund in the category with assets of Rs. 68 billion.
- Excluding the EPFO allocation, which rose to two specific mutual funds, Nippon is now the largest ETF player in the country.
- The company has a presence across 275 locations across the country with 85,500 distributors empanelled with them.
- In FY22, NAM India distributed the highest ever dividend, with a payout ratio of 96%. Over the last eight financial years, NAM India has distributed a cumulative dividend of Rs. 34 billion.
- The company reported an other income loss of 18 crores mainly due to fall in the markets and reductions in the 10 year G-sec yield. This has affected the holdings of the company.
- In terms of our overall yield, some of the fixed income or debt assets have seen shrinkage and that money has come in terms of ETF as well as the liquid.
- The company has maintained its equity composition of 42%, while debt has declined and has gone into ETF and liquid.
- The company is facing a downward pressure on yield which the management expects will continue for a few quarters because of the slew of new players that have come in.
- The management expects money flows to return to debt due to interest rate changes.
Analyst’s View:
Nippon India Life Asset Management is one of the leading asset managers in the country. The company has done well to bounce back after the rebranding last year. The company saw a flat performance in Q1. The company continues to have a good hold in the ETF space which has seen good growth in market share in terms of ETF folios. It remains to be seen whether the company will be able to maintain its hold over the rapidly rising ETF space and how the landscape of the mutual fund industry changes with the influx of new tech-driven players like NAVI & Zerodha. Nonetheless, given the company’s market positioning and its competitive advantage in the ETF and AIF space, Nippon Life India Asset Management is a must-watch stock for every investor interested in the AMC space.
Q4 FY22 Updates
Financial Results & Highlights
Standalone Financials (In Crs) | ||||||||
Q4FY22 | Q4FY21 | YoY % | Q3FY22 | QoQ % | FY22 | FY21 | YoY% | |
Sales | 348 | 335 | 3.8% | 345 | 0.8% | 1428 | 1325 | 7.7% |
PBT | 228 | 207 | 10.1% | 228 | 0% | 945 | 842 | 12.2% |
PAT | 170 | 157 | 8.2% | 168 | 1.1% | 711 | 649 | 9.5% |
Consolidated Financials (In Crs) | ||||||||
Q4FY22 | Q4FY21 | YoY % | Q3FY22 | QoQ % | FY22 | FY21 | YoY% | |
Sales | 372 | 361 | 3% | 368 | 1% | 1535 | 1419 | 8.1% |
PBT | 234 | 217 | 7.8% | 235 | -0.4% | 988 | 877 | 12.6% |
PAT | 174 | 166 | 4.8% | 173 | 0.5% | 743 | 679 | 9.4% |
Detailed Results:
- Revenues were flattish with being up 3% YoY in Q4. Profits for the company rose 4.8% YoY.
- FY22 performance was decent with revenue growth of 8.1% YoY and PAT growth of 9.4% YoY.
- As of 31th March 2021, AUM was at Rs 3.46 trillion.
- Mutual Fund QAAUM was at Rs 2,833 billion which was up 7.4% YoY.
- NIMF added over 20 lac unique Investors & 1.6 million ETF folios in Q4.
- Equity assets were at 42% of total AUM. Retail Assets were at Rs 638 bn which is 52% of NIMF AUM.
- Fixed income (Debt + Liquid) assets have remained flat YoY and account for 38% of total AUM.
- Successfully completed 7 NFOs including Taiwan Equity Fund, Flexi Cap fund, Nifty Auto ETF and Silver ETF.
- Garnered assets of approx. INR 40 from more than 275k investors.
- Digital transactions now account for 58% of total purchases. Digital SIP registrations contributed to 47% of the total new SIPs registered in Q4.
- The company enjoys a market share of 14% in ETF space with an AUM of Rs 558 bn. It also has a volume share of 68% and a 58% share of folios in the ETF space.
- B30 assets accounted for 17.2% of overall MF AUM vs industry average of 16.6%.
- The overall distribution mix was 56% direct and 44% distributed assets. In distributed assets, Banks were at 21%, National Distributors were at 20% and MF Distributors were at 59%.
- Individual AUM accounted for 81% of distributed assets which is 50% of the total MF AUM.
- The offshore business has an AUM of Rs 114 bn.
- NIAIF has raised commitments of Rs 45 bn as of March ’22.
- Nippon India Digital Innovation Fund has made investment in 6 VC funds and is in the process to approve 3 more investments.
- Made 5 complete exits in Real Estate portfolios during the year.
- An interim dividend of INR 3.5 per share and a proposed final dividend of Rs 7.5 per share was announced in Q4.
Investor Conference Call Details
- The management expects the growth trajectory to maintain in future.
- NIMF’s total market share rose by 26 basis points to 7.38%.
- NIMF added more than 7 million investors and now the highest investor base in the industry.
- Offerings in the pipeline include, S&P EV Index fund, Innovation Fund and the Artificial Intelligence fund of funds.
- The company has filed 11 schemes in total for regulatory approval.
- The management states that it will focus on strong asset growth but never at the cost of profitability.
- 70% of the Individual assets have a vintage of more than 12 months.
- 12% of SIP folios have continued for more than five years as compared to the industry average of 8%.
- The Gold ETF of Nippon is the biggest in its category with an AUM of Rs 66 billion.
- Nippon India mutual fund share in ETF folios rose to 58% . Nippon India has 68% share of ETF volumes on BSE & NSE.
- As a diversified AMC, the company manages INR 682 billion in non-mutual fund segments. The offshore business has a set of 114 billion under management and advisory.
- As of March,’22, the company has 84,300 distributors with them, having added 500 this quarter.
- The management states that marketing efforts are focused mainly on digital channels which are more coft effective as compared to offline advertising.
- Profit as a ratio of Average assets under management rose from 21 basis points to 28 basis points.
- The management states that the pressure on the yield has been due to the mix, the size of the fund, the rates at which competition is offering etc.
- The management states that it currently has enough capital that it needs therefore is rewarding shareholders through dividends. And going forward it plans to continue the dividend payout at 100% of profits.
- The management says that newer assets will have a lower yielding as compared to old assets, but this will be covered up by the operating leverage.
- The management sees outflow from the long term debt category and consolidation in the liquid & ultra-short term category. They see the construct of the flows changing without any reduction in the overall levels of debt.
- The company would not be adding more than a few physical branches as the focus would be mainly on digital.
Analyst’s View:
Nippon India Life Asset Management is one of the leading asset managers in the country. The company has done well to bounce back after the rebranding last year. The company saw a flat performance in Q4. The company continues to have a good hold in the ETF space which has seen good growth in market share in terms of ETF folios to 58%. It is also looking to launch several new funds and ETFs to maintain its hold on this industry. The company is focused on expanding digitally and will not be doing a big physical branch expansion going forward. The management has also stated that the new products should have lower yields than before but the company can make up for the drop with operating leverage at large scale. It remains to be seen whether the company will be able to maintain its hold over the rapidly rising ETF space and how the landscape of the mutual fund industry changes with the influx of new tech-driven players like NAVI & Zerodha. Nonetheless, given the company’s market positioning and its competitive advantage in the ETF and AIF space, Nippon Life India Asset Management is a must-watch stock for every investor interested in the AMC space.
Q2 FY22 Updates
Financial Results & Highlights
Standalone Financials (In Crs) | ||||||||
Q2FY22 | Q2FY21 | YoY % | Q1FY22 | QoQ % | H1FY22 | H1FY21 | YoY% | |
Sales | 392 | 302 | 29.8% | 342 | 14.6% | 734 | 617 | 19.0% |
PBT | 266 | 186 | 43.0% | 223 | 19.3% | 489 | 378 | 29.4% |
PAT | 200 | 141 | 41.8% | 171 | 17.0% | 372 | 290 | 28.3% |
Consolidated Financials (In Crs) | ||||||||
Q2FY22 | Q2FY21 | YoY % | Q1FY22 | QoQ % | H1FY22 | H1FY21 | YoY% | |
Sales | 425 | 322 | 32.0% | 369 | 15.2% | 794 | 659 | 20.5% |
PBT | 283 | 191 | 48.2% | 236 | 19.9% | 519 | 391 | 32.7% |
PAT | 213 | 145 | 46.9% | 181 | 17.7% | 395 | 301 | 31.2% |
Detailed Results:
- Revenues were up 32% YoY in Q2. Profits for the company rose 46.9% YoY.
- H1 performance was similarly good with revenue growth of 20.5% YoY and PAT growth of 31% YoY.
- As of 30th September 2021, AUM was at Rs 4.01 trillion.
- Mutual Fund QAAUM was at Rs 2,655 billion which was up 33% YoY.
- NIMF added over 18 lac unique Investors & 1.7 million ETF folios in Q2.
- Equity assets were at 43% of total AUM. Retail Assets were at Rs 777 bn which is 28% of NIMF AUM.
- Fixed income (Debt + Liquid) assets have grown 15.15% YoY and account for 41% of total AUM.
- The company is planning to add Nippon India Nifty Auto ETF in Q3 which will have exposure to top Auto companies on NSE. It is planning the launch of Nippon India Taiwan Equity Fund and Nippon India S&P EV Index Fund.
- Digital transactions now account for 53% of total purchases. Digital SIP registrations contributed to 46% of the total new SIPs registered in Q2.
- The company enjoyed a market share of 13% in ETF space with an AUM of Rs 448 bn. It also has a volume share of 70% and a 58% share of folios in the ETF space.
- The company now has a market share of 12.5% in retail folios space and 11.9% market share in total folios.
- B30 assets accounted for 17.9% of overall MF AUM vs industry average of 16.5%.
- The overall distribution mix was 54% direct and 46% distributed assets. In distributed assets, Banks were at 22%, National Distributors were at 21% and MF Distributors were at 57%.
- Individual AUM accounted for 82% of distributed assets which is 46% of the total MF AUM.
- The offshore business has an AUM of Rs 117 bn.
- NIAIF has raised commitments of Rs 40 bn as of September ’21.
- Nippon India Digital Innovation Fund has made investment in 4 VC funds and is in the process to approve 3 more VC funds.
- NIAIF has also received approval from SEZ Authorities for setting up of AIF in GIFT IFSC.
- An interim dividend of INR 3.5 per share was announced in Q2.
Investor Conference Call Details
- The growth trajectory of the industry is expected to maintain for the next 3 to 5 years.
- NIMF’s total market share rose by 21 basis points to 7.33% in H1FY22.
- The share of retail industry folios grew from 10% to 13%, with an increased share of unique investors in the industry at 32%.
- NIMF launched Nippon India Flexi Fund which received applications from over 250,000 investors from approximately 2,400 cities in Q2.
- The Taiwan equity fund received approval recently, with more offerings like the S&P EV fund and Nifty ETFs in the pipeline. In total, 8 products are filed for regulatory approval. The Taiwan fund is the first fund made in collaboration with Taiwan’s largest asset manager, Cathay SITE.
- The Retail AUM was at INR 777 billion. The contribution of retail AUM to total AUM is amongst the highest in the industry at 28% compared to the industry average of 23%.
- 68% of individual assets have a vintage of more than 12 months.
- B30 category contributed INR 488 billion AUM.
- The gold ETF of Nippon is the biggest in its category with an AUM of Rs 60 billion.
- Received approval from authorities for setting up an AIF in GIFT city.
- The company has a distributor base that has reached over 82,000 as of Sep 2021.
- Of the 8 new products in the pipeline, 7 are ETFs.
- The management has admitted that NFOs have contributed to around 50% of equity inflows in H1. The management also states that as asset size increases, realization values go down due to several factors including increased competition.
- In the ETF basket except for CPSE and gold ETF, the company makes 15-17 bps margins depending on the type of product and the competition.
- The rise in other income during the quarter was due to the equity MTM of the company’s investments.
- The fixed income yields have gone up for the company as some of the stressed investments have borne fruit.
- Over 24 lac new investors added in last 1 year by NIMF with the majority being retail. The company has also added 2000 new distributors in H1 with the majority from B-30 cities.
- No cut down of branches or rapid expansion is planned, with more focus to be put on digital means according to the management. The company’s 270+ branches are covering over 1000 cities and towns in India.
- Tie-up with Cathay not only for Taiwan fund in India but also for providing Cathay access to Indian markets.
- The partnership with Zerodha and other new age equivalents should be beneficial for the company according to the management.
- The management also states that there aren’t any significant costs involved with launching new products for the company.
- The management states that liquidity is of prime importance for ETFs as investors may have to suffer an impact cost of 2-3% if sufficient liquidity is not there in ETFs.
- The company is focused on smaller ticket size investors for ETFs as they are most sticky according to the management.
- In ETFs, the fixed income segment is mostly covered by HNIs and institutional investors.
- Inflows into MF space are going to stay steady according to the management.
- There are 45 AMC players in the market but the large players continue to dominate the industry.
Analyst’s View:
Nippon India Life Asset Management is one of the leading asset managers in the country. The company has done well to bounce back after the rebranding last year. The company saw a decent performance in Q2 with sales rising 32% YoY and profits rising 47% YoY. The company continues to have a good hold in the ETF space which has seen good growth in market share in terms of ETF folios to 58%. It is also looking to launch several new funds and ETFs to maintain its hold on this industry. The collaboration with Cathay SITE is expected to provide both NIMF and Cathay with opportunities for investment products in both India and Taiwan. The management has identified small ticket investors as the target segment with its upcoming suite of ETFs. It remains to be seen whether the company will be able to maintain its hold over the rapidly rising ETF space and how the landscape of the mutual fund industry changes with the influx of new tech-driven players like NAVI & Zerodha. Nonetheless, given the company’s market positioning and its competitive advantage in the ETF and AIF space, Nippon Life India Asset Management is a must-watch stock for every investor interested in the AMC space.
Q1 FY22 Updates
Financial Results & Highlights
Standalone Financials (In Crs) | |||||
Q1FY22 | Q1FY21 | YoY % | Q4FY21 | QoQ % | |
Sales | 342 | 314 | 8.92% | 335 | 2.09% |
PBT | 223 | 192 | 16.15% | 207 | 7.73% |
PAT | 171 | 150 | 14.00% | 157 | 8.92% |
Consolidated Financials (In Crs) | |||||
Q1FY22 | Q1FY21 | YoY % | Q4FY21 | QoQ % | |
Sales | 369 | 336 | 9.82% | 362 | 1.93% |
PBT | 236 | 200 | 18% | 218 | 8.26% |
PAT | 181 | 156 | 16% | 167 | 8.38% |
Detailed Results:
- Revenues were up 9.8% YoY in Q1. Profits rose for the company with Q1 PAT rising 16% YoY.
- As of 30th June 2021, AUM was at Rs 3.78 trillion.
- Mutual Fund AUM was at Rs 2,404 billion which was up 33% YoY.
- NIMF added over 6 lac unique Investors & 1.4 million ETF folios in Q1.
- Equity assets were at 41% of total AUM. Retail Assets were at Rs 696 bn which is 28% of NIMF AUM.
- Fixed income (Debt + Liquid) assets have grown 17% YoY and account for 42% of total AUM.
- The company added Nippon India Nifty Pharma ETF in Q1 which has exposure to top 10 Pharma companies on NSE.
- Digital transactions now account for 58% of total purchases. Digital SIP registrations contributed to 59% of the total new SIPs registered in Q1.
- The company enjoyed a market share of 13% in ETF space with an AUM of Rs 402 bn. It also has a volume share of 73% and a 51% share of folios in the ETF space.
- B30 assets accounted for 19% of overall MF AUM vs industry average of 16.3%.
- The overall distribution mix was 55% direct and 45% distributed assets. In distributed assets, Banks were at 21%, National Distributors were at 21% and IFAs were at 58%.
- Individual AUM accounted for 83% of distributed assets which is 45% of the total MF AUM.
- The offshore business has an AUM of Rs 101 bn.
- NIAIF has raised commitments of Rs 38 bn as of June ’21.
Investor Conference Call Details
- 69% of the individual assets have a vintage of more than 12 months.
- The gold ETF of Nippon is the biggest in its category with an AUM of Rs 60 bn.
- The company has filed for a Taiwan equity fund in collaboration with Cathay SITE in Taiwan.
- The Nippon India Digital Innovation Fund has committed funds of $100 million and has initiated investment activities.
- The impaneled distributor base has reached over 79,700.
- NAM India has become a signatory to UN-PRI, which is the world’s largest voluntary corporate sustainability initiative.
- Revenues have risen YoY, but costs have essentially remained flat YoY.
- The company is seeing all-around acceptance with more banks coming to the channel and more institutional investors coming back.
- The management acknowledges that the digital space has a lot of opportunities for NAM. The company’s presence in the offline space and focus on the online space should help it address and cover for any and every facet left out by the 2 mediums when taken alone.
- Digital business across aggregators has risen 200% YoY for NAM while digital business from RIAs has also risen 270% YoY. The consistently high digital share of new SIPs also points to the growing importance of digital medium for the company.
- The company is also working with strategic partners like IBM and Adobe to enhance the digital side of the business.
- The HNI investor presence in fixed income and ETF has increased for NAM.
- The company is launching the Taiwan fund for Indian investors as it saw an opportunity here from the semiconductor shortage.
- Yields are broadly flat YoY. The overall realization is higher as a larger proportion has come from MFD than banks and due to higher pick up from B30 regions.
- The major focus for every player in the industry is to grow and capture the market due to the massive under-penetration of the industry. This is especially true given that operating leverage shall take care of yields at higher performance figures.
- Yields are dependent on many factors of which the biggest is asset mix.
- HNI market share in NAM is at 7.3% vs industry average of 5.3%. This has been because of rising HNI participation in the ETF space. The HNI AUM in ETF segment for NAM is 18% vs the industry average of 2%.
- The company remains committed to sharing 85% of its yearly profits as dividends.
Analyst’s View:
Nippon India Life Asset Management is one of the leading asset managers in the country. The company has done well to bounce back after the rebranding last year. The company saw a decent performance in Q1 with profits rising 16% YoY. The company continues to have a good hold in the ETF space which has seen good growth in market share in terms of ETF folios to 51%. It is also looking to add a Taiwan equity fund soon in collaboration with Cathay which should provide access to the vast semiconductor industry in Taiwan to Indian investors. The company has also seen good growth in HNI share in NAM with HNI AUM in ETF rising as high as 18%. It remains to be seen whether the company will be able to match the pace of growth of its prime competitor HDFC AMC in this space and how the landscape of the mutual fund industry changes with the influx of new tech-driven players like NAVI & Zerodha. Nonetheless, given the company’s market positioning and its competitive advantage in the ETF and AIF space, Nippon Life India Asset Management is a must-watch stock for every investor interested in the AMC space.
Q4FY21 Updates
Financial Results & Highlights
Standalone Financials (In Crs) | |||||
Q1FY22 | Q1FY21 | YoY % | Q4FY21 | QoQ % | |
Sales | 342 | 314 | 8.92% | 335 | 2.09% |
PBT | 223 | 192 | 16.15% | 207 | 7.73% |
PAT | 171 | 150 | 14.00% | 157 | 8.92% |
Consolidated Financials (In Crs) | |||||
Q1FY22 | Q1FY21 | YoY % | Q4FY21 | QoQ % | |
Sales | 369 | 336 | 9.82% | 362 | 1.93% |
PBT | 236 | 200 | 18% | 218 | 8.26% |
PAT | 181 | 156 | 16% | 167 | 8.38% |
Detailed Results:
- Revenues were up 9.8% YoY in Q1. Profits rose for the company with Q1 PAT rising 16% YoY.
- As of 30th June 2021, AUM was at Rs 3.78 trillion.
- Mutual Fund AUM was at Rs 2,404 billion which was up 33% YoY.
- NIMF added over 6 lac unique Investors & 1.4 million ETF folios in Q1.
- Equity assets were at 41% of total AUM. Retail Assets were at Rs 696 bn which is 28% of NIMF AUM.
- Fixed income (Debt + Liquid) assets have grown 17% YoY and account for 42% of total AUM.
- The company added Nippon India Nifty Pharma ETF in Q1 which has exposure to top 10 Pharma companies on NSE.
- Digital transactions now account for 58% of total purchases. Digital SIP registrations contributed to 59% of the total new SIPs registered in Q1.
- The company enjoyed a market share of 13% in ETF space with an AUM of Rs 402 bn. It also has a volume share of 73% and a 51% share of folios in the ETF space.
- B30 assets accounted for 19% of overall MF AUM vs industry average of 16.3%.
- The overall distribution mix was 55% direct and 45% distributed assets. In distributed assets, Banks were at 21%, National Distributors were at 21% and IFAs were at 58%.
- Individual AUM accounted for 83% of distributed assets which is 45% of the total MF AUM.
- The offshore business has an AUM of Rs 101 bn.
- NIAIF has raised commitments of Rs 38 bn as of June ’21.
Investor Conference Call Details
- 69% of the individual assets have a vintage of more than 12 months.
- The gold ETF of Nippon is the biggest in its category with an AUM of Rs 60 bn.
- The company has filed for a Taiwan equity fund in collaboration with Cathay SITE in Taiwan.
- The Nippon India Digital Innovation Fund has committed funds of $100 million and has initiated investment activities.
- The impaneled distributor base has reached over 79,700.
- NAM India has become a signatory to UN-PRI, which is the world’s largest voluntary corporate sustainability initiative.
- Revenues have risen YoY, but costs have essentially remained flat YoY.
- The company is seeing all-around acceptance with more banks coming to the channel and more institutional investors coming back.
- The management acknowledges that the digital space has a lot of opportunities for NAM. The company’s presence in the offline space and focus on the online space should help it address and cover for any and every facet left out by the 2 mediums when taken alone.
- Digital business across aggregators has risen 200% YoY for NAM while digital business from RIAs has also risen 270% YoY. The consistently high digital share of new SIPs also points to the growing importance of digital medium for the company.
- The company is also working with strategic partners like IBM and Adobe to enhance the digital side of the business.
- The HNI investor presence in fixed income and ETF has increased for NAM.
- The company is launching the Taiwan fund for Indian investors as it saw an opportunity here from the semiconductor shortage.
- Yields are broadly flat YoY. The overall realization is higher as a larger proportion has come from MFD than banks and due to higher pick up from B30 regions.
- The major focus for every player in the industry is to grow and capture the market due to the massive under-penetration of the industry. This is especially true given that operating leverage shall take care of yields at higher performance figures.
- Yields are dependent on many factors of which the biggest is asset mix.
- HNI market share in NAM is at 7.3% vs industry average of 5.3%. This has been because of rising HNI participation in the ETF space. The HNI AUM in ETF segment for NAM is 18% vs the industry average of 2%.
- The company remains committed to sharing 85% of its yearly profits as dividends.
Analyst Views:
Nippon India Life Asset Management is one of the leading asset managers in the country. The company has done well to bounce back after the rebranding last year. The company saw a decent performance in Q1 with profits rising 16% YoY. The company continues to have a good hold in the ETF space which has seen good growth in market share in terms of ETF folios to 51%. It is also looking to add a Taiwan equity fund soon in collaboration with Cathay which should provide access to the vast semiconductor industry in Taiwan to Indian investors. The company has also seen good growth in HNI share in NAM with HNI AUM in ETF rising as high as 18%. It remains to be seen whether the company will be able to match the pace of growth of its prime competitor HDFC AMC in this space and how the landscape of the mutual fund industry changes with the influx of new tech-driven players like NAVI & Zerodha. Nonetheless, given the company’s market positioning and its competitive advantage in the ETF and AIF space, Nippon Life India Asset Management is a must-watch stock for every investor interested in the AMC space.
Q4FY21 Updates
Financial Results & Highlights
Standalone Financials (In Crs) | ||||||||
Q4FY21 | Q4FY20 | YoY % | Q3FY21 | QoQ % | FY21 | FY20 | YoY% | |
Sales | 335 | 142 | 135.92% | 374 | -10.43% | 1326 | 1134 | 16.93% |
PBT | 207 | 37 | 459.46% | 257 | -19.46% | 843 | 561 | 50.27% |
PAT | 157 | 12 | 1208.33% | 202 | -22.28% | 649 | 412 | 57.52% |
Consolidated Financials (In Crs) | ||||||||
Q4FY21 | Q4FY20 | YoY % | Q3FY21 | QoQ % | FY21 | FY20 | YoY% | |
Sales | 362 | 150 | 141.33% | 399 | -9.27% | 1419 | 1193 | 18.94% |
PBT | 218 | 27 | 707% | 269 | -18.96% | 877 | 560 | 56.61% |
PAT | 167 | 4 | 4075% | 212 | -21.23% | 679 | 416 | 63.22% |
Detailed Results
- Revenues were up >100% YoY in Q4. Profits rose for the company with Q4 PAT rising from Rs 4 Cr last year to Rs 167 Cr in Q4FY21. All performance rise has been a lot in relative terms as last year’s base was very small.
- FY21 revenues showed healthy growth with a 19% YoY rise and PAT grew 63% YoY.
- The company also posted its highest ever yearly PAT at Rs 679 Cr.
- As of 31st Mar 2021, AUM was at Rs 3.52 trillion.
- Mutual Fund AUM was at Rs 2,218 billion which was up 33% YoY.
- NIMF added over 9 lac unique Investors & 1.4 million ETF folios in FY21. It also added 350 institutional investors as customers in the year.
- Equity assets grew to 41% of total AUM. Retail Assets were at Rs 643 bn.
- Fixed income (Debt + Liquid) assets have grown 10% YoY and account for 43% of total AUM.
- The company added 5 new funds in the passive space in Q4 and added a total of 9 new funds in FY21.
- Digital transactions now account for 53% of total purchases. Digital SIP registrations contributed to 59% of the total new SIPs registered in FY21.
- The company enjoyed a market share of 13% in ETF space with an AUM of Rs 373 bn. It also has a volume share of 72% and a 42% share of folios in the ETF space.
- Retail AUM accounts for 28% of total assets which is the highest in the industry.
- B30 assets accounted for 17.9% of overall MF AUM vs industry average of 16.3%.
- The overall distribution mix was 54% direct and 46% distributed assets. In distributed assets, Banks were at 22%, National Distributors were at 21% and IFAs were at 57%.
- Individual AUM accounted for 83% of distributed assets which is 46% of the total MF AUM.
- The offshore business has an AUM of Rs 103 bn.
- NIAIF has raised commitments of Rs 37 bn as of Mar ’21.
- It also launched and closed 2 new schemes- one being a long-only equity scheme and the other an offshore real estate scheme.
- NAM India signed LoI with Cathay SITE, Taiwan’s largest asset manager, in April 2021.
- The company announced a final dividend of Rs 5 per share bringing the total dividend for the year to Rs 8 per share.
Investor Conference Call Highlights
- SIP and STP for the full year rose by more than 1.1 million for NAM.
- The operating expenses have remained high despite a drop in other expenses due to COVID-19 as the company has incurred one-off expenses to set up its digital infrastructure.
- The management is confident that the slide in market share in the last 2 years has finally come to an end and the company is now witnessing a good comeback.
- The company has been leveraging its parent Nippon Life and has been able to launch 2 real estate funds in Japan and a digital innovation fund with it. It has also been able to sign the tie-up with Cathay because of Nippon Life.
- Employee costs and other expenses have remained almost flat YoY.
- The management assures that the company is determined to maintain good liquidity in ETFs as it is an essential part of the appeal for ETFs.
- The company is aiming to build volumes as ETF is a volume game according to the management and thus it will be looking to maintain competitive pricing. The blended yield on ETFs is around 19 bps.
- The share of the banca channel has gone down as the competition and preference for other products like insurance are gaining greater importance for the channel. This is primarily due to lower realization per product for MF as compared to others.
- Another reason for the fall is the rise of the direct investing channel in the MF industry and the rise of RIAs.
- The management sees further room for improvement in the HNI space where recovery has been the slowest.
- The management doesn’t see the lack of a dedicated bank as an issue as it helps NAM maintain a widely distributed channel base with a major focus on IFAs.
- The management maintains that brand image is important in attracting more investors than a startup AMC; at the size and scale level of NAM, it is not too big of a differentiator for the branded part of the industry.
- The management states that although the average SIP size for NAM is lower than the industry average, it is better for them as it enhances stickiness.
- There is massive potential in ETFs as developed markets have around 40% of funds in ETFs while this number in India is only 10%.
- The management maintains that reaching out to small town IFAs and supporting on-ground distributors in B30 locations is key to expansion in this segment.
- The net yield including expenses in ETFs is around 11-12 bps.
Analyst’s View
Nippon India Life Asset Management is one of the leading asset managers in the country. The company has done well to bounce back after the rebranding last year. The company saw good performance in Q4 & FY21 with profits rising as high as 64% YoY in FY21 despite sales rising only 18% YoY. The company continues to have a good hold in the IFA space with this channel being the largest distribution channel for the company and has seen good participation in its recent NFOs. It has strengthened its hold in the passive space by launching 5 new passive funds in Q4. It continues to bring in old customers who are now looking to restart their relationship post the rebranding which is expected to the primary reason behind adding 9 lac unique customers in FY21. It remains to be seen whether the company will be able to match the pace of growth of its prime competitor HDFC AMC in this space and how the overall economy and market sentiments will be affected by the 2nd wave of COVID-19. Nonetheless, given the company’s market positioning and its competitive advantage in the ETF and AIF space, Nippon Life India Asset Management is a must-watch stock for every investor interested in the AMC space.
Q3FY21 Updates
Financial Results & Highlights
Standalone Financials (In Crs) | ||||||||
Q3FY21 | Q3FY20 | YoY % | Q2FY21 | QoQ % | 9MFY21 | 9MFY20 | YoY% | |
Sales | 374 | 342 | 9.36% | 302 | 23.84% | 990 | 992 | -0.20% |
PBT | 257 | 189 | 35.98% | 186 | 38.17% | 636 | 524 | 21.37% |
PAT | 202 | 144 | 40.28% | 141 | 43.26% | 492 | 400 | 23.00% |
Consolidated Financials (In Crs) | ||||||||
Q3FY21 | Q3FY20 | YoY % | Q2FY21 | QoQ % | 9MFY21 | 9MFY20 | YoY% | |
Sales | 399 | 361 | 10.53% | 322 | 23.91% | 1057 | 1044 | 1.25% |
PBT | 269 | 194 | 38.66% | 191 | 40.84% | 659 | 532 | 23.87% |
PAT | 212 | 149 | 42.28% | 145 | 46.21% | 513 | 412 | 24.51% |
Detailed Results
- Revenues were up 10% YoY in Q3. Profits rose for the company with Q3 PAT rising 42% YoY.
- 9M revenues were almost flat YoY while profits were up 24.5% YoY.
- As of 31st Dec 2020, AUM was at Rs 3,52 trillion.
- Mutual Fund AUM was at Rs 2,207 billion which was up 35% since Q4FY20.
- Total Operating expenses were down 22% YoY in Q3. Employee costs fell by 18% YoY.
- NIMF added over 150,000 folios in Q3. NIMF has 6.2 million Unique Investors which represents 29% of the MF industry market share.
- Digital transactions now account for 52% of all transactions.
- The company saw 4.1 lac SIP registrations in Q3.
- Equity assets grew to 39% of total AUM. Retail Assets were at Rs 586 bn which 26% of the total AUM vs an industry average of 20%.
- Fixed income (Debt + Liquid) assets have grown 12.8% YoY and account for 46% of total AUM.
- Successfully launched Nippon India ETF Nifty CPSE Bond Plus SDL – 2024 Maturity & Nippon India Passive Flexicap FoF in Q3.
- From Oct 2020, NAM India began to manage investments of POLIF and RPOLIF.
- The company enjoyed a market share of 13% in ETF space with an AUM of Rs 312 bn. It also has a volume share of 76% and 31% share of folios in the ETF space.
- B30 assets accounted for 17.5% of overall MF AUM vs industry average of 16%.
- The overall distribution mix was 55% direct and 45% distributed assets. In distributed assets, Banks were at 25%, National Distributors were at 20% and IFAs were at 55%.
- Individual AUM accounted for 82% of distributed assets which is 45% of the total MF AUM.
- The offshore business has an AUM of Rs 102 bn.
- NIAIF has raised commitments of Rs 35 bn as of Dec ’20.
- The company announced an interim dividend of Rs 3 per share.
Investor Conference Call Highlights
- Nippon India Mutual Fund added 233,000 SIPs and STP folios.
- NIMF onboarded 260 institutional investors in 9MFY21.
- The overall rise in equity AUM was MTM while the debt AUM rose due to net additions majority of which was from institutional investors.
- The management doesn’t see any return to pre-covid levels of fixed expenses and has stated that the current levels are sustainable and can stay on even after the pandemic goes away.
- The company had SIP collections of Rs 660 Cr in Dec.
- The management has acknowledged that the company is open to acquisitions in the mutual fund, AIF, PMS, or strategic fintech space.
- Overall equity has been lower in Q3 while fixed income has risen somewhat while ETFs have continued their growth momentum in terms of market share.
- The increase in other income is from the rise in MTM of the company’s investments into its own equity & ETF schemes.
- Although debt investors have been moving from long term to short term funds in the past 6-9 months due to the overall risk-off mood, the management believes that this will start getting reversed as economic normalcy comes back.
- The management is crediting the rise in new SIP to digital SIP registration.
- From an overall yield perspective, equity yields have fallen 15% YoY while debt yields have fallen due to migration of funds from long term (higher yield) to short term (lower yield).
- The management admits that there will indeed be outflows since markets are at all-time highs but in overall small investors are expected to stay invested and the main stickiness in equity is expected to be from SIPs.
- The company is indeed working with parent Nippon Life to bring various foreign funds to India and is exploring areas for collaboration here.
- Although ETF market share has gone up, the corresponding effect on yield was not enough to mitigate the fall in yield from other sectors. This is because ETFs are inherently low realization products.
- Barring increments, employee costs shall remain the same for the near future.
- The company will not be opening any new branches but will be looking to service more than 1000 cities and towns through its 230+ branches with the hub and spoke model.
- The management has stated that HNIs are indeed coming back to the company and more than 25 of the top 100 companies in India have restarted their relationship with the company since the brand change. Thus the company is gaining market share slowly in the MNC space in India.
- The brand acceptance of the Nippon Life brand is very high among institutional and HNI investors.
- The company will have 2 new fund managers joining in soon. One will be in debt and the other will be fixed income.
- Nippon’s contribution to the offshore fund is at 50% currently.
- Employee count has indeed gone down due to various office functions getting automated and due to the company only making new hires to replace old ones going out.
Analyst’s View
Nippon India Life Asset Management is one of the leading asset managers in the country. The company has done well to bounce back after the rebranding last year. The company saw good performance in Q3 with profits rising as high as 42% YoY despite sales rising only 10% YoY. The company continues to have a good hold in the IFA space with this channel being the largest distribution channel for the company and has seen good participation in its recent NFOs. It is also looking to maintain its growth momentum in the ETF space and bring in new investors to this asset class. It continues to bring in old customers who are now looking to restart their relationship post the rebranding. It remains to be seen whether the company will be able to match the pace of growth of its prime competitor HDFC AMC in this space and whether it will be able to maintain its growth momentum going forward. Nonetheless, given the company’s market positioning and its competitive advantage in the ETF and AIF space, Nippon Life India Asset Management is a must-watch stock for every investor interested in the AMC space.
Q2FY21 Updates
Financial Results & Highlights
Standalone Financials (In Crs) | ||||||||
Q2FY21 | Q2FY20 | YoY % | Q1FY21 | QoQ % | H1FY21 | H1FY20 | YoY | |
Sales | 302 | 307 | -1.63% | 314 | -3.82% | 617 | 650 | -5.08% |
PBT | 186 | 157 | 18.47% | 192 | -3.13% | 378 | 335 | 12.84% |
PAT | 141 | 134 | 5.22% | 150 | -6.00% | 290 | 257 | 12.84% |
Consolidated Financials (In Crs) | ||||||||
Q2FY21 | Q2FY20 | YoY % | Q1FY21 | QoQ % | H1FY21 | H1FY20 | YoY | |
Sales | 322 | 323 | -0.31% | 336 | -4.17% | 659 | 683 | -3.51% |
PBT | 191 | 158 | 20.89% | 200 | -4.50% | 391 | 339 | 15.34% |
PAT | 145 | 137 | 5.84% | 156 | -7.05% | 301 | 262 | 14.89% |
Detailed Results
- Revenues were flat YoY in Q2. Profits rose for the company with Q2 PAT rising 6% YoY.
- As of 30th Sep 2020, AUM was at Rs 2.77 trillion.
- Mutual Fund AUM was at Rs 1,929 billion
- Total Operating expenses were down 20% YoY in Q2. Employee costs fell by 21% YoY.
- NIMF added over 151,600 folios in Q2. NIMF has 6.2 million Unique Investors which represents 29% of the MF industry market share.
- Digital transactions now account for 48% of all transactions.
- The company saw 3.12 lac SIP registrations in Q2.
- Equity assets grew to 39% of total AUM. Retail Assets were at Rs 520 bn which 26% of total AUM vs an industry average of 20%.
- Fixed income (Debt + Liquid) assets have grown 12% YoY and account for 47% of total AUM.
- Successfully launched Nippon India Multi-Asset Fund, Nippon India ETF Nifty IT & Nippon India Nifty Smallcap 250 Index Fund in Q2.
- The company enjoyed a market share of 13% in ETF space with an AUM of Rs 286 bn. It also has a volume share of 70% and 33% share of folios in the ETF space.
- B30 assets accounted for 18.2% of overall MF AUM vs industry average of 16.1%.
- Tenure of SIP book was > 5 years for 84% and >10 years for 79% of the SIP book.
- The overall distribution mix was 53% direct and 47% distributed assets. In distributed assets, Banks were at 26%, National Distributors were at 20% and IFAs were at 54%.
- Individual AUM was at Rs 753 billion which accounted for 79% of distributed assets which is 47% of total MF AUM.
- The offshore business has AUM of Rs 93 bn.
- NIAIF has raised commitments of Rs 34 bn as of Sep ’20.
Investor Conference Call Highlights
- NAM India received a mandate to manage Post Office Life Insurance and rural post office insurance funds.
- Nippon India Digital Innovation Fund has committed funds in excess of USD 100 billion and has initiated investment activities.
- The company added over 400 IFAs in this quarter to take the IFA base to over 77,000.
- The fall in yields is mainly from the change in the mix in the fixed income category and the decline of the credit risk & long duration segments which were big margin generators.
- The company has seen both additions of fund managers & realignment of portfolios, which have been implemented with the feedback of Nippon Life on the risk management side from Japan.
- The company has started issuing ESOPs as variable pay and this has led to a fall in employee costs.
- The management admits that there is a slowdown in equity flows in the industry currently.
- The management remains confident of attracting investors with the launch of the new products in the year so far.
- The post office mandate is expected to add Rs 50,000-60,000 Cr to the company’s AUM. Out of this, around 10% is in equity schemes and 90% is in debt.
- On the international mandates, the company expects to see a drawdown of $100 million from the Indo-Japanese Tech Fund in the AIF segment in the next 2-3 years.
- Realization in debt has fallen from 22 bps in Q1 to 20.5 bps in Q2.
- The rise in other income in Q2 was mainly due to the reversal of the company’s investment in its own equity and ETF schemes which yielded losses in Q4FY20.
- The share of equity in total AUM has risen due to the rise in markets in Q2.
- The company has almost 40% market share ex of EPFO money in the ETF space. It has 19 products spread across equity, both domestic and foreign, sectoral, and also fixed-income in the ETF segment currently.
- The company is looking to launch more ETFs in Q3. It has already got SEBI approval for certain more ETFs.
- The company sees opportunities in asset management arising from strategic partnerships in the financial industry.
- The management stresses that execution is going to be the key for the company to enhance its market share and add newer investors.
- The company is not looking to push to capture temporary market share by paying extra incentives. It is looking to provide a complete package of products, uniqueness of product, performance, and execution capability.
- The management has stated that investors in India are warming up to ETFs especially family offices. A major factor behind the growing preference for ETFs over regular MFs is the liquidity and the absence of the exit load.
Analyst’s View
Nippon India Life Asset Management is one of the leading asset managers in the country. The company has done well to bounce back after the rebranding last year. This was evident from the number of investor additions in Q2FY21 as well as the launch of new products like Nippon India Multi-Asset Fund, Nippon India ETF Nifty IT & Nippon India Nifty Smallcap 250 Index Fund. The company continues to have a good hold in the IFA space with this channel being the largest distribution channel for the company. It is also looking to capitalize on its expertise on ETFs and will continue to launch ETF products and bring in new investors to this space. It has also done well to win the post office mandate which cements its credentials as an institutional asset manager. It remains to be seen whether the company will be able to match the pace of growth of its prime competitor HDFC AMC in this space and whether it will be able to maintain its growth momentum going forward. Nonetheless, given the company’s market positioning and its competitive advantage in the ETF and AIF space, Nippon Life India Asset Management is a must-watch stock for every investor interested in the AMC space.
Q1FY21 Updates
Financial Results & Highlights
Standalone Financials (In Crs) | |||||
Q1FY21 | Q1FY20 | YoY % | Q4FY20 | QoQ % | |
Sales | 314 | 343 | -8.45% | 142 | 121.13% |
PBT | 192 | 179 | 7.26% | 37 | 418.92% |
PAT | 150 | 123 | 21.95% | 12 | 1150.00% |
Q1FY21 | Q1FY20 | YoY % | Q4FY20 | QoQ % | |
Sales | 336 | 360 | -6.67% | 150 | 124.00% |
PBT | 200 | 181 | 10.50% | 27 | 640.74% |
PAT | 156 | 126 | 23.81% | 4 | 3800.00% |
Detailed Results
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- Revenues declined 6.67% YoY. Profits rose for the company with Q1 PAT rising 24% YoY.
- As of 31st March 2020, AUM was at Rs 2,55,265 Cr or $34 billion.
- Operating expenses were down 24% YoY in Q1.
- NIMF added almost 220,000 folios in Q1 while ETF folios rose by over 117,000 which was more than the total number of investors added in the whole of FY20.
- Total AUM as of 30th June 2020 was at Rs 2,73,701 Cr or $36.5 billion. Average AUM in Q1 was at Rs 1,80,061 Cr or $24 billion.
- Equity assets grew to 38% of total AUM. Retail Assets were at Rs 44,429 Cr which 24% of total AUM vs an industry average of 19%.
- B30 assets were at Rs 32,923 Cr accounting for 17.3% of overall MF AUM vs industry average of 15.4%.
- Individual AUM was at Rs 91,211 Cr or $12.2 billion which accounted for 48% of MF AUM.
- The company enjoyed a market share of 15% in ETF space with AUM of Rs 25,765 Cr.
- As of March 31, 2020, NIMF has over 91 lakh investor folios. Out of these, over 34 lakh were SIP folios, with an annualized SIP book of approx. Rs 8,400 Cr or $1.1 billion.
- Digital purchase transactions grew 43% QoQ and digital channel now contributes to 56% of total new purchases.
Investor Conference Call Highlights
- Since the transition in October 2019, NAM has gained more than 120 institutional investors per quarter. In addition, 75 new HNI and family offices and presently, 26 out of the top 100 corporates of India have started to reinvest in Nippon India Mutual Fund.
- NIMF has one of the highest market shares of unique mutual fund investors in the industry at 29%.
- New digital SIP registrations have grown 116%.
- In Q1, the company launched Corporate Solutions Suite, a distant last full-spectrum digital asset for the institutional investor segment.
- NIMF has a 76% share in ETF volumes on MSE and BSE.
- As of June 2020, Nippon India AIF has raised commitments of INR 34 billion across all funds.
- Direct channel contributed 52% of the mutual fund AUM. Of the distributed AUM, the share of IFAs was 55% and 76% of the distributed assets have been contributed by individual investors.
- The employee expenses have declined 13% QoQ and are at Rs 72+ Cr. The management has stated that this level of employee expenses will be sustained in the future.
- With the increase in digital business, the management is expecting the cost of operations to go down in the long term.
- The overall realization is at 46 bps. The realization in equity is at 95-100 bps. The company shares around 50-70% of its TER with its distribution partners with 50% for IFAs and 70% for key partners like banks, etc.
- The company’s equity assets account for 70-75% of total fees.
- The management has stated that the reason that the bank channel is low compared to competitors is that the IFA channel is significantly high and is more difficult to replicate for competitors.
- The company has around 12% of its financial assets in equity and ETFs as seed capital.
- The net reversal in MTM since Q4 has resulted in another income of Rs 99 Cr in Q1.
- The management fees charged in both physical and digital transactions are the same but the difference comes in the physical cost of transacting.
- Overall Liquid fund AUM was at Rs 35,000+ Cr while debt was at Rs 52,000+ Cr.
- The company has only Rs 320 Cr in credit risk funds.
- The Board had taken the decision to not invest in any security below AA rating to stay conservative in the future.
- The company has seen redemptions in offshore funds from some institutional investors.
- THE average SIP size in Q1 was at Rs 2200.
- The debt and fixed deposits have contributed to 35-40% of other income while the rest is MTM from equity.
- The management has stated that the company will be selling Indian investment products globally with the help of Nippon’s global network and will also look to incorporate global practices into Indian operations. Some of these companies from Nippon’s global network include TCW from the USA, DWS in EU and MLC in Australia.
- The management has stressed on the fact that the AMC space is a volumes game where AUM needs to be rising and costs need to be kept low.
- 16% of direct equity inflows for the company are through NAM India.
- 16% of business is direct while 84% of the business through distributed assets.
Analyst’s View
Nippon India Life Asset Management is one of the leading asset managers in the country. The company has done well to bounce back after the rebranding last year. This was evident from the number of investor additions in Q1FY21 which exceeded the number of investors who joined in the whole of FY20. The company continues to have a good hold in the IFA space with this channel being the largest distribution channel for the company. It remains to be seen whether the company will be able to match the pace of growth of its prime competitor HDFC AMC in this space and whether it will be able to maintain its growth momentum going forward. Nonetheless, given the company’s market positioning and its competitive advantage in the ETF and AIF space, Nippon Life India Asset Management is a must-watch stock for every investor interested in the AMC space.
Q4FY20 Updates
Financial Results & Highlights
Standalone Financials (In Crs) | ||||||||
Q4FY20 | Q4FY19 | YoY % | Q3FY20 | QoQ % | FY20 | FY19 | YoY% | |
Sales | 141.9 | 380.1 | -62.67% | 341.9 | -58.50% | 1134.3 | 1589.0 | -28.62% |
PBT | 37.3 | 206.6 | -81.95% | 188.7 | -80.23% | 561.4 | 686.7 | -18.25% |
PAT | 11.9 | 144.9 | -91.79% | 143.9 | -91.73% | 412.3 | 475.2 | -13.24% |
Consolidated Financials (In Crs) | ||||||||
Q4FY20 | Q4FY19 | YoY % | Q3FY20 | QoQ % | FY20 | FY19 | YoY% | |
Sales | 149.6 | 397.5 | -62.36% | 360.6 | -58.51% | 1193.2 | 1649.9 | -27.68% |
PBT | 27.4 | 212.1 | -87.08% | 193.6 | -85.85% | 559.8 | 700.2 | -20.05% |
PAT | 4.1 | 151.7 | -97.30% | 149.3 | -97.25% | 415.8 | 487.1 | -14.64% |
Detailed Results
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- Revenues declined 62% YoY mainly due to Other income coming in at Rs (125) Cr. Profits remained subdued for the company with Q4 PAT falling 97% YoY and FY20 PAT falling 14.6% YoY.
- As of 31st March 2020, AUM was at Rs 2,55,265 Cr or $34 billion.
- Equity assets grew to 42% of total AUM. Retail Assets were at Rs 44,429 Cr which 24% of total AUM.
- B30 assets were at Rs 32,101 Cr accounting for 17.4% of overall MF AUM.
- Individual AUM was at Rs 90,738 Cr which accounted for 49% of MF AUM.
- The company enjoyed a market share of 16% in ETF space with AUM of Rs 29,456 Cr.
- As on March 31, 2020, NIMF has over 87 lakh investor folios. Out of these, over 32 lakh were SIP folios, with an annualized SIP book of approx. Rs 9,700 Cr.
- Digital purchase transactions grew31% YoY and digital channel now contributes to 45% of total new purchases.
- Nippon India AIF has now had a total commitment of Rs 3200 Cr as of 31st March 2020.
- The board has announced a final dividend of Rs 2 per share.
Investor Conference Call Highlights
- New SIP registration has gone up by 56% YoY.
- The company has a total of 76,200 distributors right now with no single distributor contributing more than 5% of the AUM.
- Operating expenses declined 34% YoY in Q4.
- The negative other income is mainly M2M loss from fall in NAV of the company’s investments into its own equity and ETF schemes which fell in March with the general market fall. The overall portfolio declined by 26% then.
- The management has clarified that the company has no exposure to Reliance Capital or any other Reliance group company.
- More than 80% of the company’s SIPs are for more than 5 years.
- The management has mentioned that the company will continue to incur expenses of around Rs 150 Cr every quarter.
- The management has stated that other than credit funds, no other funds have witnessed any major hits.
- The company has started to operate under the new tax rate of 25%.
- The management maintains that the IFAs remain the biggest channel for the company.
- The company is seeing funds moving from credit funds and to high-quality low duration funds.
- The other expenses have fallen from Rs 60+ Cr to Rs 40 Cr mainly due to greater automation efficiencies and lower discretionary spending.
- The management is focused on profitable growth and profitability rather than market share.
- Operating profit for Q4 was at 29 bps while the figure for FY20 was 27 bps vs 21 bps a year ago.
Analyst’s View
Nippon India Life Asset Management is one of the leading asset managers in the country. The company has gone through a painful rebranding process in the last 12 months which saw the AUM for the company especially from institutional investors and HNIs decline. The company has finished its rebranding process in October The company continues to hold a commanding presence in the retail ETF space and has been expanding into the AIF space. This helps the company diversify and grow into alternate revenue streams that are not dependent on the domestic market. The Q4 results have been disappointing for the company mainly due to the negative other income which has depressed profits for the company in Q4. It remains to be seen whether the company will be able to match the pace of growth of its prime competitor HDFC AMC in this space and how it may capitalize on investor behaviour change due to COVID-19. Nonetheless, given the company’s market positioning and its competitive advantage in the ETF and AIF space, Nippon Life India Asset Management is a must-watch stock for every investor interested in the AMC space.
Q3 2020 Updates
Financial Results & Highlights
Consolidated Financials (In Crs) | ||||||||
Q3FY20 | Q3FY19 | YoY % | Q2FY20 | QoQ % | 9MFY20 | 9MFY19 | YoY% | |
Sales | 360.64 | 403.97 | -10.73% | 322.6 | 11.79% | 1043.65 | 1252.43 | -16.67% |
PBT | 193.64 | 163.32 | 18.56% | 168.28 | 15.07% | 532.46 | 488.16 | 9.07% |
PAT | 149.3 | 109.74 | 36.05% | 136.73 | 9.19% | 411.63 | 335.41 | 22.72% |
Detailed Results
-
- Revenues declined 11% YoY but showed good growth of 12% QoQ. Profits remained buoyant for the company with Q3 PAT rising 36% YoY and 9M PAT growing 23% YoY.
- The company saw AUM growth resuming after 4 quarters of AUM decline with 5% QoQ growth to Rs 2,04,370 Cr.
- Equity assets grew to 44% of total AUM. Retail Assets were at Rs 54,630 Cr which 26% of total AUM.
- B30 assets were at Rs 38,676 Cr accounting for 19% of overall MF AUM. B30 cities contributed to 27% of total AUM showcasing good penetration in these areas.
- Individual AUM was at Rs 1,10,232 Cr which accounted for 53% of MF AUM.
- The company enjoyed a market share of 16% in ETF space in terms of QAAUM. The company also has a 42% market share in ETF space in terms of folios and 76% in terms of volume share.
- Equity AUM rose 9% YoY while fixed income AUM fell 32% YoY.
- SIP inflows remained stable YoY but the number of equity transactions grew 14% YoY to 3.3 million transactions per month in Q3. Over 80% of incremental SIPs have a tenure of more than 5 years.
- The company added 600 new distributors in Q3 bringing the total up to 76000.
- Around 55% of all distributors are IFAs showcasing the strong reach of the company in the IFA community. No single distributor contributes to > 5.3% of AUM.
- Digital transactions rose 38% YoY with lumpsum purchases growing 32% YoY and digital SIP registrations grew 27% YoY.
- The company’s offshore business has a total AUM of Rs 11,600 Cr as of Dec ’19.
- The board has announced an interim dividend of Rs 3 per share.
- Nippon India AIF has a commitment around Rs 2700 Cr across all schemes.
Investor Conference Call Highlights
- The management mentions that the company has received a good response after the rebranding process was completed in October and the company is seeing HNIs and institutional investors returning to the company.
- Over 170 SMEs have started to invest with the company after the rebranding.
- The company has received an equity mandate of $500 million from a sovereign wealth fund in the last quarter.
- The company has also launched a venture capital fund of funds and has received commitments of $100 million from various investors in Japan.
- The management has stated that the exposure to Reliance subsidiaries is around Rs 320 Cr and the company has already written off this amount.
- The total exposure to Reliance Capital is only Rs 130 Cr while the balance sheet of the AMC does not contain any exposure to Reliance subsidiaries.
- The company earns around Rs 10 Cr currently from AIF and offshore business. The margin on the offshore business is around 33 to 50 bps.
- The management has stated that fixed income AUM for the industry has been falling but the management expects the AUM to stabilize in the coming quarters.
- The company has around 9 lac customers and the majority of the investment comes from institutional investors. The management is confident that the retail inflows into ETFs are going to rise going forward.
- The company has 3 funds in Japan (2 bond funds and 1 equity fund) which account for $1.2 billion.
- The management feels that the company stands to gain a lot from foreign capital inflows in the future due to the influence and pedigree of the promoting entity of Nippon Life.
- The management has reiterated that the company has a mandate of distributing 60% to 90% of its earnings every year as dividends for the last 5 years and this is expected to stay stable.
- The management expects to leverage Nippon Life’s influence to increase the size of alternative investments under the company.
- The management has clarified that there have been no major managerial exits from the company in the rebranding process and the top management remains committed to the company.
- The management has the company has reinvested almost all the surplus back into the company’s mutual funds and FDs.
Analyst’s View
Nippon India Life Asset Management is one of the leading asset managers in the country. The company has gone through a painful rebranding process in the last 12 months which saw the AUM for the company especially from institutional investors and HNIs decline. The company has finished its rebranding process in October and has also seen its AUM rising in the last quarter. The company has a very good reach and market positioning in the retail market which is evident from the company’s retail assets and its reach in the IFA community. The company also holds a commanding presence in the retail ETF space and has been expanding into the AIF space. This helps the company diversify and grow into alternate revenue streams that are not dependent on the domestic market. The company stands to gain a lot from its association with its promoter Nippon Life which should help the company attract foreign inflows much better than other domestic rivals. It remains to be seen whether the company will be able to match the pace of growth of its prime competitor HDFC AMC in this space. Nonetheless, given the company’s market positioning and its competitive advantage in the ETF and AIF space, Nippon Life India Asset Management is a must-watch stock for every investor interested in the AMC space.
Disclaimer
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