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

The management of Nippon Life India Asset Management Limited provided an optimistic outlook for the future during the Q4 FY25 earnings conference call. Key points highlighted in their outlook include:

1. Growth Rate: NAM India is recognized as among the fastest-growing Asset Management Companies (AMCs) in the Top-10, with the highest increase in AUM market share in the industry over a two-year period.

2. SIP Performance: The company's SIP market share has notably increased, doubling from 5.15% in March 2022 to over 10% as of March 2025, laying a robust foundation for future growth.

3. Financial Performance: For FY25, the company achieved its highest-ever Annual Profit After Tax at INR 12.86 billion (growth of 16% YoY) and highest Operating Profit at INR 14.04 billion (growth of 47% YoY).

4. Dividend Payout: The Board declared a dividend of INR 18.00 per share, representing approximately 91% of net profit.

5. Product Development: Management aims to enhance access for Japanese investors to Indian equity markets, launching products such as the 'Nippon India ETF Nifty 50 BeES GIFT' in collaboration with Nissay Asset Management Corporation.

6. Future Pipeline: Planned new products include a Long Short Equity Fund and a second Fund of Funds targeting India-focused venture capital funds.

7. Opportunities in Offshore: The company sees strong potential in attracting Japanese retail money to India, bolstered by governmental policies encouraging overseas investments.

8. Strong Investor Base: NAM India continues to maintain the largest investor base in the mutual fund industry, with 20.8 million unique investors.

The management expressed confidence in sustaining this trajectory and acknowledged the overall favorable conditions for growth in the future.

Here are the major questions from the Q&A section of the earnings transcript along with detailed answers provided in first person:

1. Question: "How do you see the SIP trajectory for the industry and for Nippon as such going ahead, we have been hearing a lot of closures and the incremental account openings have been weaker, how do you see the trend in this space, say over the medium term?" Answer: We are seeing some market volatility lead to higher stoppages in SIPs, which is temporary. For our business, SIP flows have remained better than industry trends. We aim to diversify our SIP offerings to stabilize flows, which will help us in the long term.

2. Question: "How do you see our expenses in FY '26, and could you split the employee cost into ESOP expenses?" Answer: We anticipate a cost increase of around 15% in FY '26, excluding ESOP. Employee costs are expected to rise similarly, about 14%, with current ESOP expenses around INR 11 crores, estimated to reach INR 43 crores for the full year.

3. Question: "Is the drop in sequentially in your managed assets from about 16,700 odd crores to about INR 15,200 odd crores due to outflows?" Answer: The decrease is due to mark-to-market reductions; there have been no significant outflows. We're optimistic about our new NISA scheme launched in Japan and expect Japanese retail investments to significantly increase over the next 1-2 years.

4. Question: "What do you expect for the offshore business given recent scheme launches?" Answer: Our offshore business, primarily supported by our parent Nippon Life, is anticipated to grow, especially with new schemes targeting Japanese investors. We believe their investments in India will become substantial as awareness increases, though specific projections are hard to make.

5. Question: "Across your top funds, how have recent performance trends impacted share of flows?" Answer: Despite market dips, our top funds have maintained stable inflows. Short-term performance fluctuations haven't materially affected our inflows, reflecting strong investor confidence in our funds' long-term strategies.

6. Question: "What is your strategy regarding new fund launches, specifically with thematic or sectoral funds?" Answer: We have strategically avoided launching mega NFOs. Our focus is on building a stable base rather than seeking short-term gains from NFOs. Our historical data shows that sticky investors favor funds with established track records rather than new launches.