HDFC Securities: Nippon Life’s Market Share Remains Elusive
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HDFC Securities Report
Nippon Life India Asset Management Ltd.’s Q1 FY21 revenue at Rs 2.33 billion (-28.3%/-15.1% YoY/QoQ) was 5.1% below our estimate as outflows from the credit risk fund and a reduction of equity in the mix resulted in a lower yield.
Debt/equity quarterly average assets under management (QAAUM) market share deteriorated 246/235 basis points YoY to 7.5/6.8%.
Debt funds QAAUM declined 9.0% QoQ due to outflows and write-downs. The core operating profit was at Rs 966 million, -33.5/36.6% YoY/QoQ, mainly due to lower revenue.
Recovery in equity markets and decline in bond yields resulted in treasury income of Rs 1.03 billion (up 192% YoY), raising adjusted profit after tax by 24.3% YoY to Rs 1.56 billion.
Management stated that it raised capital from high networth individuals/family offices (75 plus), corporate (26/100 BSE 100 began reinvesting), and institutions (adds: 120 plus since October 2019).
Nippon Life is revisiting its investment policy with the intent of reducing the volatility of treasury income.
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