NAM-INDIA - NIPPON LIFE INDIA ASSET MANAGEMENT LIMITED Share Price

In their earnings call for Q1 FY26, management shared a positive outlook for Nippon Life India Asset Management Limited, highlighting several key metrics and forward-looking initiatives:

1. Financial Performance: The company achieved its highest ever quarterly operating profit of INR 3.78 billion and profit after tax of INR 3.96 billion, reflecting an increase of 23% YoY and 7% QoQ in operating profit, and a 19% YoY and 33% QoQ increase in profit after tax.

2. Asset Growth: Total assets under management (AUM) reached INR 7.44 trillion, with mutual fund AUM specifically growing by 27% YoY and 10% QoQ to INR 6.13 trillion. The market share increased by 23 bps QoQ to 8.49%, marking the highest since June 2019.

3. Equity and SIP Performance: The equity net sales market share improved significantly, entering double digits for the quarter. The systematic investment plan (SIP) market share exceeded 10% in June 2025, with SIP contributions rising to INR 806 billion, up 29% YoY and 3% QoQ.

4. Digital and Growing Investor Base: Digital transactions rose by 27% YoY, contributing to 75% of new purchases in Q1 FY26. The total unique investors grew to 55.3 million, an 18% YoY increase, with 21.2 million unique mutual fund investors.

5. Future Initiatives: Management emphasized the importance of launching products in the Systematic Investment Fund (SIF) category and expanding the offshore strategy, particularly in the Japanese market. They noted upcoming topics including new AIFs, increased focus on ETFs, and continued digital strategy enhancements.

6. Market Conditions: Management acknowledged favorable market trends, with a sharp rebound in equity markets (NIFTY up 8.5% QoQ), which positively influenced AUM growth across multiple asset classes.

Overall, the management's forward-looking strategy includes bolstering digital platforms, expanding investor engagement, and leveraging new product launches to drive growth and market share in the forthcoming quarters.

Questions and Answers from the Q&A Section of the Earnings Call

1. Question by Shreya Shivani: "Can you help us with the yields for the different segments for the quarter? What about the volume data for the systemic book and the ESOP cost guidance?"

   Answer: "The blended yield for the quarter is 36 bps, equity yield is 55 bps, debt yield 25 bps, liquid 12 bps, and ETF 17 bps. On ESOP costs, we expect around INR 46-47 crores for the year; we reported about INR 11 crores this quarter. Next year, the estimate is around INR 26-27 crores."

2. Question by Mohit Mangal: "How have the inflows in the new passive funds performed?"

   Answer: "The response to our newly launched passive funds has been good. While we don't target specific volumes initially, interest builds as investors become aware of the unique strategies we offer. The recently closed MNC Fund also received a positive response."

3. Question by Lalit Deo: "Why has there been an increase in yield on the ETF side?"

   Answer: "The increase in ETF yields is due to the composition of various funds within the segment, particularly as higher expense schemes grew. Additionally, yield compression in general is influenced by our size and telescopic pricing."

4. Question by Madhukar Ladha: "What is your view on the new proposal that allows AMCs to launch new schemes when AUM exceeds INR 50,000 crores?"

   Answer: "We view this proposal neutrally. It's primarily about enhancing portfolio management capabilities rather than simply size. While there could be marginal benefits, we are focused on scaling our business significantly, as that's the key to growth."

5. Question by Prayesh Jain: "Have there been any changes in customer behavior in the current volatile market?"

   Answer: "Investor behavior has matured; they no longer overreact to market volatility. While performance is important, brand trust and service experience also play crucial roles in decision-making. This reinforces our commitment to brand strength."

6. Question by Meghna Luthra: "What is the scope for further cuts in distribution commissions?"

   Answer: "We do not have a specific target for cuts. Currently, we've reduced fees on three schemes, comprising 45% of our equity AUM. Any further adjustments will depend on market conditions."