Summary of earnings call for Nippon Life India Asset Management Ltd published on 31 Jul, 2025

Nippon Life India Asset Management Limited
Q1 FY26
Call date · July 28, 2025

1 · Management Commentary

Key Positives

• Achieved highest ever quarterly Operating Profit at INR 3.78 bn and Profit After Tax at INR 3.96 bn.
• Fastest growing AMC among Top-10 both QoQ and YoY; highest increase in AUM market share in the industry.
• Market share at 8.49%, highest since June 2019; equity net sales and SIP market shares both in double digits.
• Mutual Fund QAAUM grew 27% YoY and 10% QoQ to INR 6.13 trillion.
• Largest investor base in the industry with 21.2 mn unique investors.
• Strong growth in digital transactions (3.57 mn in Q1 FY26, up 27% YoY); digital business contributed 75% of new purchase transactions.
• ETF AUM at INR 1.74 trillion with 19.76% market share; Gold ETF among Top-10 globally.

Key Negatives

• Share of Equity AUM in overall AUM decreased by 0.3% QoQ to 46.9%.
• Net inflows in equity category were lower QoQ; industry-wide SIP folio clean-up impacted reported numbers.
• Operating expenses increased 16% YoY and 8% QoQ, mainly due to investments in talent, non-MF businesses, and technology.

Forward Guidance

• Capex plans: Continued investments in talent and technology infrastructure.
• New products/segments: SIF team in place, led by Andrew Holland; product launches planned. Four new passive products launched in Q1; future pipeline includes Empowered India flexi cap strategy, Credit Opportunities AIF Scheme 2, and new GIFT City funds.
• Expected client wins/losses: Expanding footprint in Japanese, Asian, European, and Latin American markets.
• Revenue/margin outlook: Yield compression of 2-3 bps YoY expected due to telescopic pricing; ESOP cost for FY26 expected at INR 46 crores, FY27 at INR 26-27 crores.
• Other strategic initiatives: Focus on derisking business flows, strengthening digital franchise, and building SIF as a separate business vertical.

2 · Q&A Highlights

Q 1 (Composite): What are the trends and outlook for yields across segments, and what is the expected impact of distributor commission rationalization?
A (Management): - Blended yield for the quarter: 36 bps; equity yield: 55 bps; debt: 25 bps; liquid: 12 bps; ETF: 17 bps. - Yield decline mainly due to telescopic pricing; expect 2-3 bps YoY drop going forward. - Distributor commission rationalization already implemented for schemes covering 45% of equity AUM; further cuts will be evaluated dynamically.

Q 2 (Composite): Can you clarify the impact of the SIP folio clean-up and trends in systematic flows?
A (Management): - Industry-wide one-time clean-up of inactive SIP folios in April impacted reported numbers; underlying SIP book continues to grow MoM. - SIP market share at 10.07% for June 2025; monthly systematic book at INR 33.2 bn for June 2025.

Q 3 (Composite): What is the performance and outlook for passive funds and new product launches?
A (Management): - Passive strategy focuses on seeding unique ideas; inflows build over time as investor interest grows. - Four new passive products launched in Q1; MNC Fund NFO in July received good response.

Q 4 (Composite): What is management’s view on the SEBI discussion paper regarding scheme size and TER?
A (Management): - No negative impact expected; could be marginally positive if implemented as proposed. - Asset management remains a volume game; focus is on scaling up rather than minor yield changes.

Q 5 (Composite): How are flows distributed across schemes and market cap segments?
A (Management): - Flows are well-distributed across all market cap offerings, supported by a strong and granular SIP book (75% of SIPs by value < INR 10,000). - Business flows have been derisked over the last two years.

Q 6 (Composite): What is the approach to SIF and team structure?
A (Management): - SIF is being built as a separate business vertical with a dedicated team; leveraging internal research where possible but investing in new talent.

Q 7 (Composite): Is there a change in approach to the investment book, particularly equity vs. debt allocation?
A (Management): - Rationalized equity exposure to align with seed capital requirements; aim to reduce volatility by focusing more on fixed income in the proprietary book.

3 · Other Key Numbers

• Operating Profit: INR 3.78 bn (up 23% YoY, 7% QoQ)
• Profit After Tax: INR 3.96 bn (up 19% YoY, 33% QoQ)
• Revenue: INR 6.07 bn (up 20% YoY, 7% QoQ)
• Other Income: INR 1.46 bn (up 12% YoY, up 5.3x QoQ)
• Operating Expenses: INR 2.29 bn (up 16% YoY, 8% QoQ)
• ESOP cost: INR 11 crores for the quarter; FY26 guidance INR 46 crores; FY27 guidance INR 26-27 crores
• Total AUM: INR 7.44 trillion (includes Mutual Funds, Managed Accounts, Offshore Funds, GIFT City)
• Mutual Fund QAAUM: INR 6.13 trillion
• ETF AUM: INR 1.74 trillion; ETF market share: 19.76% (up 69 bps QoQ)
• Digital purchase transactions: 3.57 million in Q1 FY26 (up 27% YoY)
• Digital business: 75% of total new purchase transactions in Q1 FY26
• AIF cumulative commitments: INR 81.0 bn (up 25% YoY); Q1 FY26 fund raise: ~INR 7 bn
• Offshore AUM: INR 166 bn (up 10% YoY); UCITS Equity Fund AUM: ~USD 543 mn
• Industry QAAUM: INR 72.1 trillion (up 22% YoY, 7% QoQ)
• Industry SIP contribution for the quarter: INR 806 bn (up 29% YoY, 3% QoQ)
• Monthly SIP flows (June 2025): INR 273 bn (all-time high)
• Unique investors in MF industry: 55.3 mn (up 18% YoY)
• NFO AUM (Nippon India Income Plus Arbitrage Active Fund of Fund): INR 5.8 bn
• Share of Equity in overall AUM (industry): 56.6% for Q1 FY26
• Share of Equity AUM in NAM India overall AUM: 46.9% for Q1 FY26
• Market share: Overall 8.49%; Equity 7.04%
• Share in industry’s ETF folios: 52%; ETF volumes on NSE/BSE: 51%
• Real Estate Scheme (Nippon India Yield Optimiser) commitments: ~INR 3 bn
• Performing Credit AIF: 9 active investments; VC FoF: 14 funds, 395+ startups
• Digital franchise: Real-time intelligent platforms, tailored communication, GenZ engagement, data-driven campaigns

Note: This is an AI generated summary of the earnings call. There may be inaccuracies in the summary. Please refer to the original transcript before making investment decisions.