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Published: August 15, 2024
Updated: August 15, 2024

Nippon Life India Asset Management

Growing from strength to strength

Nippon Life India Asset Management Ltd, a leading mutual fund company, is going from strength to strength, with its marketshare shooting up 93 bps to 8.20 per cent during the year ended March 2024. Its growth is spreading in all its categories, revealed Sundeep Sikka, Executive Director and CEO, at a conference call organized to discuss the Q1FY25 performance.

Monthly SIP flows stood at Rs 21,300 crore in June 2024, which was another all-time high. SIP folios increased 7% qoq to 89.9 million. The ETF category witnessed an inflow of Rs 26,700 crore in Q1FY2025. Unique investors in the mutual fund industry increased to 46.9 million, up 22% yoy. The industry folios increased to 191 million at end-June 2024.

Mr Sikka said Nippon Life India continues to focus on scaling up existing products which have a long-term track record. It will continue to launch new products in the passive segment, both index and ETF, as and when required. The company closed the quarter with a total AUM of Rs 6.04 lakh crore, which includes mutual funds, managed accounts and offshore funds. Mutual funds’ quarterly average AUM grew 12% qoq and 54% yoy to Rs 4.84 lakh crore at end-June 2024.

GROWING FAST

Pointing out that “the company has seen the highest increase in quarterly AUM marketshare on a yoy basis amongst all AMCs and the second highest increase on a qoq basis,” Mr Sikka added that by now, the company has emerged as the fastest growing AMC amongst the top 10 players. Its marketshare increased 24 bps qoq and 93 bps yoy to 8.20%, with a marketshare increase across all categories. This is the fifth consecutive quarter for its marketshare increase. The equity marketshare also continues to improve by 12 bps qoq and 62 bps yoy to 6.88%. The share of equity AUM in the overall AUM continued to increase to 49.8% for Q1FY2025, up from 49.2% for Q4FY2024. Individual AUMs saw a further marketshare improvement, rising 16% qoq to Rs 2.98 lakh crore. The marketshare increased 21 bps qoq to 7.95%.

According to him, corporate AUM grew 15% qoq to 2.11 lakh crore leading to a marketshare improvement of 37 bps qoq to 8.86%. B30 AUM increased 16% qoq to Rs 1 lakh crore, making the company the fastest growing large AMC in B30 locations. The marketshare improved 20 bps qoq to 8.98%. B30 AUM forms 20% of AUM as against 18% for the industry. The company continues to have the largest base of 17.5 million unique investors. The company has one in three mutual fund investors invested with it. There has been an uptick in systematic flows over the last 12 quarters, leading to an increase in marketshare by 20 bps over March 2024 to June 24 ending at 9.36%. Incremental SIP marketshare was 11%.

The monthly systematic book rose by 11% qoq to Rs 2,580 crore in June 2024 over March 2024, leading to an annualized systematic book of Rs 31,000 crore. The monthly systematic book grew 111% to Rs 2,580 crore in June 2024 over Rs 1,220 crore in June 2023, as against 44% growth for the industry. About 59% of the SIP AUM has continued for over 5 years versus 28% for the industry.

Mr Sikka also revealed that the company added 45 employees in Q1FY2025 and further added 50 more management trainees in July 2024, leading to the total headcount increase of 95 employees. A majority of the increase in headcount is on account of increasing the team size in sales and distribution and AI function. The company will continue to invest in future growth, talent and technology. Digital transformation has always been a strong focus. In the ETF segment, the company continues to be one of the largest ETF players with an AUM of Rs 1.3 lakh crore and a marketshare of 17.8% which increased by 108 bps qoq. Its share in the industry’s ETF is 60%, with 61% share of the ETF volume on NSE and BSE. Passive AUM, which includes ETF and index, has crossed a milestone of Rs 1.5 lakh crore. AIF continues to be an important focus area for the company.

STRONG QUARTER

Referring to the prospects going ahead, Mr Sikka said that the first quarter of FY2025 has been another strong quarter for the MF industry as well as for the company, and he expects the trend to continue going forward. The yield on equity stands at around 60 bps, on debt 25 bps, liquid 10-12 bps and on ETF around 15 bps.

According to Mr Sikka, the company will be adding 10- 15 branches every year. The average ticket size is increasing as investors want to stay longer and are ready to commit to a higher average ticket size. Almost 53% of expenses come from employee costs, of which almost 25% would be a variable component. The equity closing AUM is around Rs 2,59,800 crore, debt Rs 73,300 crore, liquid Rs 33,600 crore and ETF Rs 14,200 crore.