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On Tuesday, CLSA analyst Mohit Surana adjusted the price target for Nippon Life India Asset Management Ltd (NAM:IN), reducing it to INR700 from the previous INR750, while retaining an Outperform rating on the stock. Surana’s analysis follows the company’s fourth-quarter financial results for the fiscal year 2025, which showed operating profit in line with CLSA’s estimates. However, the analyst noted that the net profit exceeded expectations by 10% due to higher-than-anticipated mark-to-market (MTM) gains.
Despite the net profit beat, the asset under management (AUM) growth for Nippon Life India AMC came in at 23% for FY25, which was below CLSA’s projected 29% growth. The lower AUM growth was attributed to the volatile market conditions experienced in January and February of 2025. Looking ahead, the firm anticipates AUM growth to range between 16% and 19% over the next three years.
The CLSA report also forecasts that net profit for FY26 will likely be affected by another year of substantial employee stock ownership plan (ESOP) costs. In addition, the analysts have factored in moderate other income for the company, leading to a downward revision of the net profit estimates for FY26-27 by 10% to 16%. Consequently, this revision underpins the new price target of INR700, which corresponds to a March 2027 price-to-earnings (PE) multiple of 28.5 times.
CLSA highlighted that the asset management company (AMC) model is susceptible to market volatility. This risk is evident as both AUM and other income can be negatively impacted, as observed in the fourth quarter of FY25. Despite these challenges, CLSA maintains an Outperform rating, signaling confidence in the company’s performance amid persistent net inflows.
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