Nippon Life India Asset Management share price rises almost 9% on large trade deal news, scales 52 week highs

Nippon Life India Asset Management Ltd share price gained up to 8.9% in morning trades on the NSE on Wednesday. A large trade deal news triggered these gains.  The share price also scaled 52 week highs of ₹489 on Wednesday

CNBC TV-18 quoting sources has reported that Private sector lender IndusInd Bank is likely to divest a 2.86% equity stake in Nippon Life India Asset Management Ltd (Nippon AMC) through block deals. The block deal is valued at ₹762 crore and the broker is JM Financial Institutional Securities Ltd, sources told CNBC-TV18.

Nippon Life traded volumes on the NSE surged on Wednesday. The NSE data showed that 38,19,063 shares had changed hands . 

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Nippon Life India Asset Management Limited is one of the key asset managers in India, managing (directly & indirectly) assets across mutual funds including Exchange Traded Funds, managed accounts, including portfolio management services, alternative investments funds, and offshore funds and advisory mandates. Nippon Life is also the asset manager of Nippon India Mutual Fund’s schemes.

Nippon Life India had reported strong financial performance  during second quarter and first half FY24. Steady growth was witnessed in the  monthly SIP flows  during September quarter. SIP stands for Sytematic Investment plan.

The Assets under management (AUM) at ₹350600 Crore during September quarter had increased from ₹313600 Crore during June quarter and ₹285,100 crore during the year ago quarter. 

Analysts at Axis Securities had said that AUM Growth will persist – Nippon Life  will receive about ₹15,000 Crore per year for management of EPFO corpus and would charge about 4bps, which would add 5-6 Crore  per annum to company’s bottom line.

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Further Increased share in high-yielding asset class also remains a key positive as per Axis Securities. The share of high yielding equity in AUM increased from 44.5% in Q1FY24 to 46.8% in Q2FY24 driving a 70bps increase in yields supporting robust revenue growth. 

Overall with the lower penetration of mutual funds in India, analysts at Axis believe  that Nippon Life is in a good position to improve its AUM growth going forward as it is one of the fastest growing AMC in B-30 cities and has a strong distributor base, thereby delivering sustainable operating profit and return ratios.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions