Nippon Life India Asset Management Ltd (NAM-INDIA) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to the Nippon Life India Asset Management Limited Q2 and H1 FY '27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Prayesh Jain from Motilal Oswal Financial Services Limited. Thank you and over to you.
Prayesh Jain (Motilal Oswal Financial Services Limited): Thank you, Steve. Good evening, everyone. On behalf of Motilal Oswal, I welcome you all to the Nippon Life India Asset Management 2Q FY '27 earnings conference call. We have along with us, Mr. Sundeep Sikka, Managing Director and CEO, and the senior management team. We are thankful to the management for allowing us this opportunity. Just to inform, Mr. Sundeep would be there on the call until 4:40 p.m., post which, the other senior members of the management will take the Q&A. I would like now like to hand it over to Mr. Sundeep for his opening remarks. Over to you, sir.
Sundeep Sikka (Nippon Life India Asset Management Ltd): Thanks, Prayesh. Good afternoon, and welcome to our Q2 FY '27 earnings conference call. We have with us, President and Deputy CEO, Saugata Chatterjee; CFO, Parag Joglekar; Deputy CFO, Amol Bilagi; Chief Digital Officer, Arpan Saha; CEO of our AIF subsidiary, Ashwin Duggal; Matsui-san, the nominee of Nippon Life; and head of our Alternate, Andrew Holland. I would like I would first like to share key highlights of our performance and post that, I will hand over to Parag to speak in greater detail on the recent industry trends as well as our performance, post which we will move to Q&A. Coming to the key highlights, I would like to start by mentioning
Sundeep Sikka (Nippon Life India Asset Management Ltd): India was the fastest-growing AMC in the top 10 AMCs in H1 FY27 on overall and equity AUM. We also had the highest increase in overall AUM market share as well as equity AUM market share amongst the top 10 AMCs in H1 FY27. Our market share stood at 9.02%, relatively flat quarter-on-quarter. Importantly, both equity net market share and SIP market share remain well above our equity market share, both in high single digits. Moving to our financial performance, NAM India received achieved its highest ever quarterly operating profit of INR 5.23 billion, a growth of 25% year-on-year. Also, happy to share, the Board of Directors have declared an interim dividend of INR 9.50 per share along with Q2 FY27 results. Now, I would like to hand over the call to Parag for further details on industry trends and our performance.
Parag Joglekar (Nippon Life India Asset Management Ltd): Thank you, Sundeep. Let me start off with the markets. Equity market in Q2 FY27 witnessed a correction from prior quarter levels. The Nifty was down 5% quarter-on-quarter. The Nifty Midcap index was down 4% quarter-on-quarter while the Nifty Smallcap index was relatively flat quarter-on-quarter. The repo rate was flat quarter-on-quarter at 5.25% while the 10-year G-sec yield increased by 44 basis quarter-on-quarter to 7.19%. Gold prices were flat up 2.5%, while silver prices were down 1% quarter-on-quarter. Now moving to industry AUM and flows. Industry quarterly average AUM grew by 13% year-on-year and 5% quarter-on-quarter in Q2 FY27 to INR 87.2 trillion. The share of equity in overall AUM increased by 1% quarter-on-quarter ending at 58.2% for Q2 FY27. The equity, ex of index and arbitrage, witnessed a gross inflow of INR 2.69 trillion higher by 9% quarter-on-quarter and a net inflow of INR 1.08 trillion lower by 5% quarter-on-quarter. Categories with the highest inflows were Small Cap, Mid Cap, and Flexi Cap funds. The fixed income category witnessed a net outflow of INR 59 billion in the quarter after an inflow in the previous quarter. The ETF category had a net inflow of INR 367 billion, higher on quarter-on-quarter basis. Quarter end unique investor in the mutual fund industry increased 11% year-on-year to 63.1 million. Moving on to SIP, industry SIP flows for the quarter stood at INR 967 billion up 12% year-on-year and 3% quarter-on-quarter. Monthly SIP flows in September 2026 stood at INR 325 billion, another all-time high. Contributing SIP folios for September '26 increased 9% year-on-year and 3% quarter-on-quarter to 100.6 million. Now moving to our business performance, we closed the quarter with total asset under management of INR 8.68 trillion. This included mutual fund, managed accounts, offshore fund, and GIFT City. Our mutual fund quarterly average AUM grew 19.9% year-on-year and 4.7% quarter-on-quarter to reach INR 7.87 trillion. We were the fastest-growing AMC in the top 10 in H1 FY27 on overall and equity AUM and had the highest increase in overall and the equity quarterly average AUM market share among the top 10 AMCs in H1 FY27. I would like now to share a few key highlights for the quarter. Our mutual fund market share increased 51 basis year-on-year to 9.02%. On quarter-on-quarter basis, it was relatively flat. Our equity market share increased 27 basis year-on-year and 2 basis quarter-on-quarter to 7.44%. We achieved a high single-digit net share market share in equity segment, ex of index and arbitrage. We continued to have
Parag Joglekar (Nippon Life India Asset Management Ltd): three mutual fund investors invest with us. During the quarter we also completed the NFO of the Nippon India Income Plus Arbitrage Omni Fund of Fund raising INR 1.8 billion. I would also like to touch upon some of the important aspect of our systematic book. Our monthly systematic book rose by 2% year-on-year to INR 37 billion for September 2026. This resulted and in an annualized systematic book of INR 445 billion. Excluding STP, SIP book growth was 9% year-on-year. SIP market share stood at 9.84% for September 2026, similar to June 2026. Moving on briefly to the ETF segment. We continue to be one of the largest ETF players with AUM of INR 2.49 trillion and a market share of 21.12%, which increased by 135 basis year-on-year. Our share of industry ETF folios and volumes remain strong at around 45%. Our ETF average daily volume across key funds remain far higher than the rest of the industry. For gold and silver ETF combined closing AUM of for NIMF was INR 8 82 billion, up 6.6% quarter-on-quarter. In quarterly average AUM terms, our gold and silver ETFs represent 32% of the ETF AUM and 12% of the MF AUM. Moving on to our digital franchise. Digital purchase transactions and new SIP registrations rose to 9 million in H1 FY '27, up 15% year-on-year. Digital business contributed 78% of the total new purchase transactions in H1 FY '27. NIMMF's digital business continues to strengthen its focus on long-term investor behavior, driving initiatives to scale business and deepen SIP adoption, while reinforcing confidence in disciplined investing and market volatility. Now I would like to briefly update you on the subsidiary and the GIFT City. Starting off with AIF. Under Nippon India AIF we offer Category II and Category III AIF and have raised cumulative commitment of INR 99.8 billion across various schemes, up 14% year-on-year. In Q2 FY '27, we raised INR 4 billion of commitments across various asset class. Fundraising is currently underway for our listed equity fund, private credit fund, and direct VC fund. During Q2 FY '27, we launched our second SME Category fund, Undiscovered India Opportunities Fund-II. Nippon India credit Opportunities Fund NICCO-II with the third capital call in Q2 FY '27 is drawn down to the extent of 55%. On offshore fund, our managed AUM stood at INR 135 billion, while our GIFT City AUM stood at USD 45 million. Now on to our financial performance. For Q2 FY '27, revenue stood at INR 7.96 billion, up 20% 21% year-on-year and 4% quarter-on-quarter. Operating expenses stood at INR 2.72 billion, up 14% year-on-year and flat quarter-on-quarter. Operating profit stood at INR 5.23 billion, up 25% year-on-year and 6% quarter-on-quarter. Profit after tax stood INR 3.24 billion, down both YoY and QoQ. However, this is mainly related to the exceptional items, which I will speak about shortly. For H1 FY '27, operating profit grew by 28% year-on-year, profit after tax grew by 12% year-on-year. Further the board Board of Directors has declared an interim dividend of INR 9.5 9.5 per share along with the Q2 FY '27 results. Lastly, I would like to speak about the exceptional item recognized in the financial. During the SEBI during the quarter, SEBI accorded its in-principle acceptance of the settlement applications filed by the company and its certain officials in respect of an ongoing regulatory matter relating to past investment made by certain NIMF scheme in YES Bank AT1 bonds. This related to the show
Parag Joglekar (Nippon Life India Asset Management Ltd): notice received by the company from SEBI dated August 30th August 2024 and subsequent settlement proceedings. Considering the time and the cost and uncertainty uncertainty that is potentially associated with the generally prolonged legal proceeding, the board has decided to pursue the settlement process in the best interest of the company since it brings the matter to quietus, which in turns allows the management to remain focused on its core business. As a part of agreed terms settlement terms, an amount of INR 96.76 crore has been paid comprising of INR 89.08 crore as a reversal of management fee earned by the company over the said investment including interest, and INR 7.68 crore as a regulatory cost in respect of the company and certain company officials. The settlement amount of INR 96.76 crore has been fully paid and recognized in the financial results for the quarter and half year ended September 30, 2024, as an exceptional item. However, further communication from SEBI is awaited. With this, I would like to conclude my remarks and open the floor for questions.
Moderator: Thank you, sir. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Moderator: The first question comes from the line of Shreyas with Nomura. Please go ahead.
Shreyas (Nomura): Hi, thank you so much for the opportunity. First question was on yields. We have seen a slight deterioration in yields as compared to last quarter while other AMCs and peers have seen quarter-on-quarter increase in yields. Can you explain why is this so?
Amol Bilagi (Nippon Life India Asset Management Ltd): Yeah. Hi, Shreyas. Amol here. So the compression in yield was mainly on account of the increase in the equity AUM and due to telescopic pricing. That was the main reason for that.
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