Mark to Market impact has caused 77% decline in other income due to which Nippon AMC reported 18% fall in PAT on a yearly basis | Q3 FY22 Conference Call Highlights

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Financial Highlights

  • Revenue from operations increased by 26% YoY and 3% QoQ
  • Consolidated Core Operating Profit increased by 48% YoY from Rs.138.1 Cr to Rs.205.1 Cr in Q3 FY22
  • Profit After Tax decreased by 18% YoY due to 77% decline in other income. PAT stood at Rs.174.1 Cr as of Q3 FY22.

Business Highlights

  • Nippon Asset Management AUM stands at Rs.3.45 lakh Cr. Mutual Fund AUM increased by 32% YoY to Rs.2.80 lakh Cr in Q3. This is the third sequential quarter of market share gain.
  • Unique investors share increased from 28.7% in Dec-20 to 32.5% in Dec-21.
  • B-30 market share – It increased from 10.4% in Dec-20 to 11.6% in Dec-21. Growth was driven by improved fund performance, comprehensive product portfolio and granular distribution network.
  • NFO – Nippon AMC launched only 1 fund in Q3 FY22 – Nippon India Taiwan Equity Fund which is focused on dynamic and growth opportunities. It received applications from more than 65,000 investors including 6000 HNIs. It completed NFO of India’s first Auto ETF, Silver ETF and Silver ETF FoF in Q3. Other unique options in the pipeline are Nippon India S&P EV Index Fund, Nippon India Innovation Fund, Nippon India Artificial Intelligence FoF. They have filed for 11 products in the pipeline.
  • Digital – Digital purchase transactions increased by 83% YoY from 4.1 lakh to 7.6 lakh. 58% of purchase transactions were done digitally.
  • Distribution – The MFD base rose by 1800 distributors in Q3. They have an ongoing tie-up with 20 prominent digital partners. Currently, the direct channel contributes 55% of mutual fund AUM.
  • Received approval by IFSCA to carry out Portfolio Management Services through a branch office in GIFT City.

Concall Highlights

  • AUM mix has improved sequentially but the yields have dropped due to the following reasons-
    • Decrease in TER due to rise in AUM. Currently, equity AUM is 43% which has increased YoY.
    • Old Asset Replacement drag
    • Competition in the industry due to new NFOs by other players paying high commission
  • Other Income has declined due to Mark To Market Impact
  • Nippon AMC has built such an ecosystem that any new launch does not lead to incremental cost. It continues to be range-bound.
  • Overall market share has increased by 22 bps and stabilised at 7.3%. However, equity market share has decreased due to new equity inflows by other players. Improving performance and increasing SIP registrations will help in getting market share.
  • They want to provide a complete product portfolio to investors and plan to go with steady growth by not to launch a mega NFO but to see investors coming over a period of time.
  • At Nippon AMC, priority is to be future-ready and capture the long term opportunities
  • The management is confident of gaining equity market share

Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell stocks or MF.

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