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Nippon Life India Asset Management Ltd

| Q3 FY2026 Earnings Conference Call

BULLISH SENTIMENT

Report Source

⬤2nd Feb 26

Summary : Nippon Life India Asset Management achieved record profits and AUM growth in Q3 FY26, driven by strong ETF performance and strategic AIF collaborations, despite some market volatility and regulatory impacts.

Management Perspective positive : Management highlighted record profits, fastest growth, increasing market share, and strategic collaborations. They expressed bullishness on SIF and ETF segments, and confidence in their long-term strategy despite short-term market fluctuations.

Concall Report Analysis & Insights

Business Overview

  1. Total AUM crossed INR 8 trillion, with Mutual Fund AUM reaching INR 7 trillion.
  2. Achieved highest ever quarterly Operating Profit at INR 4.58 bn and PAT at INR 4.04 bn.
  3. Fastest growing AMC in Top-10 for Q3 FY26 and 9M FY26, increasing overall AUM market share to 8.65%.
  4. Equity Net Sales and SIP market share remained well above Equity AUM market share.
  5. Strategic collaboration with DWS Group to acquire up to 40% minority stake in AIF subsidiary.

Future Growth Prospects

  1. DWS collaboration aims to expand passive investment products and global distribution.
  2. AIF subsidiary raised INR 89.2 bn commitments, with new funds underway for listed equity, private credit, and direct VC.
  3. SIF segment is seen as a critical future business vertical, focusing on profitability over AUM.
  4. Continued investment in digital ecosystem to serve growing needs of digitally native investors.
  5. Offshore AUM grew 7% in 9M FY26, with ongoing efforts to increase global flows into India.

Management Insights

  1. Company achieved record AUM and profitability, demonstrating strong growth momentum.
  2. Emphasized leadership in ETF segment, particularly Gold & Silver ETFs, which are highly profitable.
  3. Committed to building market share in Flexi Cap category despite being a late starter.
  4. Stated a clear strategy for SIF to prioritize value addition and higher yields over AUM growth.
  5. Acknowledged market volatility but maintained conviction in existing equity portfolio strategy.

Signs of Skepticism

  1. Management downplayed a 'slight dip' in SIP market share, attributing it to market volatility.
  2. Liquid fund underperformance was called a 'temporary thing' not to be 'read too much into'.
  3. Difficulty in predicting offshore fund movement was noted, despite ongoing work and positive outlook.
  4. The impact of new SEBI regulations on yields and financials is still being assessed.
  5. Short-term equity fund performance was acknowledged as weaker, but no major portfolio changes are planned.

Risk Factors

  1. Equity market volatility has led to narrowing flows in certain categories.
  2. New SEBI regulations, like exit load removal and TER slab revisions, may impact equity-oriented AUM and yields.
  3. Short-term performance in some equity schemes has been weaker due to market volatility.
  4. Offshore fund contribution has been lower than expected and is difficult to predict.
  5. USD-INR depreciation has negatively impacted offshore fund performance.

Good To Know

  1. Digital business contributed 77% of total new purchase transactions in Q3 FY26.
  2. Nippon India AIF is entering a JV with DWS Group, a European asset manager.
  3. ESOP expense for Q3 FY26 was INR 11 crores, projected at INR 26 crores for next financial year.
  4. The 'Labour Code' impact in Q3 FY26 was a one-time gratuity change, with no material incremental impact expected.
  5. Gold ETF yields are around 60 basis points, and silver ETFs around 30 basis points.

Key Drivers

  1. DWS partnership boosts AIFs.
  2. Record profits drive strong performance.
  3. ETF leadership expands market share.
  4. Digital initiatives enhance customer reach.

Key Analyst Discussions

Competitive Environment

  1. Company is the fastest growing AMC in the Top-10 and has the largest investor base.
  2. ETF business is a scale game, with top 2-3 players typically holding the lion's share globally.
  3. Company holds 48% of industry's ETF folios and 51% of ETF volumes on exchanges.
  4. Flexi Cap category is competitive, with many multi-cap funds migrating into it.

Market Trends & Consumer Behavior

  1. Industry SIP contribution reached INR 900 bn, with monthly SIP flows at an all-time high of INR 310 bn.
  2. Small-cap fund lump sum investments remain halted due to stretched valuations and market heating.
  3. SIP movement can slow down if investors see negative returns over 2-3 years, especially for larger ticket sizes.
  4. 75% of the company's SIPs by value have a ticket size of less than INR 10,000.
  5. Unique investors in the Mutual Fund Industry increased to 59.0 mn, up 12% YoY.

Financial Highlights

  1. Yields for equity are 53 bps, debt 25 bps, and ETF 20 bps, with an overall yield of 37 bps.
  2. Moderation in other expenses was due to discretionary spending, not a directional change.
  3. Guidance for overall expense growth is approximately 15% for the next year.
  4. Gold and silver ETFs contribute to higher overall yields due to their increasing AUM.
  5. SEBI regulations on exit loads and TER slabs may impact equity AUM and yields.

Product Composition

  1. Gold and silver ETFs are backed by physical assets as per SEBI regulations.
  2. Gold and Silver ETF AUM crossed INR 1 trillion in Jan-2026, with Gold ETF among Top-15 globally for inflows.
  3. Flexi Cap fund performance was impacted by mid and small-cap correction.
  4. Company aims to improve Flexi Cap performance to gain market share.
  5. Offshore funds AUM in GIFT City grew 35% QoQ to USD 41 mn.

Strategic Considerations

  1. SIF strategy focuses on profitability and value addition, not just AUM growth.
  2. DWS collaboration is a non-binding agreement, with updates to be shared later.
  3. Company is rationalizing distributor commissions across equity schemes to mitigate regulatory impacts.
  4. Efforts are underway to build market share in the Flexi Cap category.
  5. Offshore fund growth is a continuous work in progress, with positive numbers expected in 2-3 years.