Analyst Meet / AGM     24-Jan-25
Conference Call
Nippon Life India Asset Management
Expects to keep overall expenses ex-ESOP in the range of around 15-17%

Nippon Life India Asset Management conducted a concall on 23 January 2025 to discuss the financial results for the quarter ended December 2024. Sundeep Sikka, ED&CEO of the company addressed the call:

Highlights:

The company has continued to be the fastest growing AMC among the top AMCs on YTD basis as well as 1-year, 2-year and 3-year period. This has led to a continued increase in overall AUM and Equity market share.

Equity sales market share and SIP market share remained well above the equity market share. SIP market share moved to double digits in Q3FY2025.

The company has also achieved its highest ever quarterly operating profit at Rs 376 crore in Q3FY2025.

The company has set up a branch in Gift City and has taken a Fund Management Entity (FME) license to manage the funds. The first gift fund - Nippon Large Cap Fund Gift was launched in January 2025. More fund launches are in the pipeline and will likely happen later during the calendar year.

The company will endeavor to continue its journey of profitable growth going forward including scaling up of non-mutual fund businesses.

Industry

Industry quarterly average AUM grew by 3.6% qoq and 39% yoy in Q3FY2025 to Rs 68.6 lakh crore.

The share of equity in overall AUM remains relatively flat qoq ending at 60.8% for Q3FY2025.

The equity category excluding index fund and arbitrage fund witnessed a gross inflow of Rs 2.53 lakh crore and net inflow of Rs 1.39 lakh crore. Gross inflows were lower qoq, while net inflows were higher for six successive quarters.

Categories with the highest inflows were sectoral, thematic, multicap and flexi cap funds.

Investments via the SIP route further increased with the SIP contribution for the quarter being Rs 77100 crore, up 49% yoy and 8% qoq.

Monthly SIP flows in December 2024 stood at Rs 26500 crore which was another all-time high.

The fixed income category witnessed a net inflow of Rs 43800 crore, which was lower on a qoq basis.

The ETF category had a net inflow of Rs 14300 crore in Q3FY2025.

Unique investors in the mutual fund industry increased to 52.6 million, up 25% yoy.

Company performance

The company closed the quarter with a total AUM of Rs 6.56 lakh crore, which includes mutual funds, managed accounts and offshore funds.

Mutual fund quarterly average AUM grew 3.8% qoq and 51% yoy to reach Rs 5.7 lakh crore end December 2024.

The company had the highest increase in quarterly average market share on a yoy basis among all AMC. Market share rose 1 basis qoq and 63 basis yoy to 8.31%, marking the seventh successive quarter of the market share increase.

Equity market share also continues to improve, rising 3 bps qoq and 31 bps yoy to 6.99%. The share of equity AUM in overall AUM was flat qoq at 51.1% for Q3FY2025.

The company has achieved the highest single digit market share in net sales in the equity plus hybrid segment in Q3FY2025. However, excluding NFO market share would be in double digits.

The company continues to have the largest base of 20 million unique investors.

The company has one in three mutual fund investors invest with the company.

There has been a continued uptick in SIPs over the last 14 quarters which has led to an increase in market share by 396 bases over March 2023 and 12 bps qoq to 10% end December 2024.

The company continues to be one of the largest ETF players with AUM of Rs 1.5 lakh crore and a market share of 18.14%, up 278 bps yoy. ETF market share was 55%, while the company also has a 55% share of ETF volumes on NSE and BSE.

The company launched two new products in the index fund category in Q3 - the Nippon India Nifty Realty Index Fund and Nippon India Nifty Auto Index Fund to further augment passive offering.

Digital franchise

Digital purchase transactions rose to 4.08 million in Q3FY2025, up 141% yoy. Digital business contributed 73% of the total new purchase transaction in Q3FY2025.

Subsidiaries

Under Nippon India AIF, the company offers Category 2 and Category 3 AIF and has a total commitment of Rs 6980 crore across various schemes. Fund raising is currently underway for listed Equity AIF, performing credit AIF and direct VC fund. Fund deployment across all the Strategic strategies was robust in Q3FY2025.

The team has been strengthened across the function which positions the company well for the future.

On the offshore front, the company continued to witness good equity inflows in the quarter from various incremental geographies

The company continued to expand its footprint in the Japanese institutional space.

Financial performance

Revenue stood at Rs 588 crore in Q3FY2025, up 39% yoy and 3% qoq. Other income declined 86% yoy and 87% qoq to Rs 15 crore on account of Mark to Market impact on the investment book and was impacted by adverse capital market movement during the quarter.

The company endeavor is to keep the overall expenses ex-ESOP in the range of around 15-17%.

Equity segment yield is around 57 bps, debt around 25 bps, liquid 10-12 bps, ETF is 15 bps and the blended yield is 37 bps.

The equity yield faces pressure due to market performance and AUM growth, while the company expects distribution cost rationalization should ease this concern.

On the flows side, the early trends in January 2025 do not indicate any sort of distortion and remain more or less at par with December numbers. Near-term market fluctuations and volatility may have an impact on flows.

The company does not expect to add a substantial number of branches and the focus is on increasing the efficiency of the existing branches and online channel.

The company will continue to launch a few schemes in passive business. It will not be launching any active mega NFOs. The focus remains on scaling up existing schemes.

ESOP cost for Q3FY2025 is Rs 11 crore and 9MFY2025 is Rs 31 crore.


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