Nippon Life India Asset Management Limited — Q1 FY26 earnings call

Call held 28 Jul 2025

Management summary

Nippon Life India Asset Management Limited delivered a strong Q1 FY26, achieving record operating profit and PAT, driven by robust AUM growth and market share gains. The company maintained its position as a leading AMC, with significant contributions from SIPs and ETFs, and saw strong fundraising in its AIF segment. While yield compression is an ongoing trend, management remains optimistic about future growth and strategic initiatives in new segments like SIF.

Highlights

  • Operating Profit reached a record INR 3.78 billion, up 23% YoY and 7% QoQ.

  • Profit After Tax also hit a record INR 3.96 billion, increasing 19% YoY and 33% QoQ.

  • The company was the fastest growing AMC in the Top-10, both QoQ and YoY, leading to an increase in overall AUM and Equity AUM market share.

  • Overall market share stood at 8.49%, its highest since June 2019, with Equity market share increasing 12 bps QoQ to 7.04%.

  • SIP market share was robust at 10.07% for June 2025, and Equity Net Sales market share moved into double-digits for the quarter.

Concerns

  • Blended yield compression is expected, with management guiding for around 2-3 basis points YoY drops going forward.

  • Q1 FY26 ESOP cost was INR 11 crores, significantly lower than the full FY26 guidance of INR 46 crores, implying higher costs in subsequent quarters.

  • Systematic folios saw a sequential decline due to a one-time industry-wide cleanup of inactive SIPs, though the SIP book itself grew MoM.

Key financials

  1. Total AUM 7.44 Tn
  2. Mutual Fund QAAUM 6.13 Tn +27%YoY
  3. Revenue 6.07 Bn +20%YoY
  4. Operating Profit 3.78 Bn +23%YoY
  5. Profit After Tax 3.96 Bn +19%YoY
  6. Overall Market Share 8.5%
  7. Equity Market Share 7%
  8. SIP Market Share 10.1%
  9. Blended Yield 36 bps

What they filed

Q1 FY27: revenue up 26.4%, net profit up 27.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue571 588 567 607 658 +15%705 +20%739 +30%767 +26%
EBITDA374 386 365 388 430 +15%470 +22%507 +39%508 +31%
Net profit360 295 299 396 345 −4%404 +37%385 +29%504 +27%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Operating Expenses

  • ESOP Cost Operating Expenses · FY26 · High confidence around INR 46 crores
    On ESOP cost, the yearly cost expected is in the range of around INR 46 crores, which we mentioned earlier.

    — Parag Joglekar

  • ESOP Cost Operating Expenses · FY27 · High confidence around INR 26 crores, INR 27 crores
    Next year, it will be around INR 26 crores, INR 27 crores.

    — Parag Joglekar

Profitability

  • Blended Yield Decline Profitability · Going forward · Medium confidence around 2-3 basis YoY drops
    So, actually, yes, the yield decline is mainly due to the telescopic pricing where the higher the size, lower is the yield impact will be. And so we have communicated earlier also that on a blended, we should see around 2-3 basis YoY drops in the yields.

    — Parag Joglekar

Capital Allocation

  • Proprietary Book Allocation Capital Allocation · Going forward · Medium confidence more on the fixed income side rather than equity
    But broadly, what we want to do is, from the proprietary book of the company we do not want it to be volatile with the market conditions. So, it will be basically more on the fixed income side rather than equity.

    — Sundeep Sikka

What to watch in Q2 FY26

SIF Product Launches and AUM Growth

Next quarter
Current Team in place, products to be launched in due course.
Target Specific product launches and initial AUM figures.

Why it matters

SIF is highlighted as a 'very important category going forward' and a new business line, crucial for future growth avenues.

Lastly, on the SIF front, we have the team in place, led by Industry veteran Andrew Holland, and we will launch products in due course.

Risks & concerns

  • Yield Compression

    medium

    Blended yield is 36 bps, with an expected 2-3 bps YoY drop due to telescopic pricing and increasing AUM size.

    Management acknowledged

  • Regulatory Changes (SEBI Discussion Paper)

    low

    Discussion paper on launching new schemes if existing ones cross INR 50,000 crores, with management viewing it as neutral to slightly positive.

    Analyst downplayed

  • Market Volatility

    low

    Markets have been volatile, but management believes investor behavior has evolved, with less overreaction to market swings.

    Management acknowledged

Q&A highlights

5 direct
Yields for different segments and overall yield compression Direct
So, yields for the current quarter, the blended yield is 36 basis, the equity yield is 55 basis, debt yield is 25 basis, liquid is 12 basis and ETF is 17 basis.

Provides specific yield data for different asset classes and confirms the expected 2-3 bps YoY yield compression.

Asked by Shreya Shivani

Decline in systematic folios and SIP cleanup Direct
With regard to SIP, actually, SIP book for us this quarter on a MoM basis actually has gone up. What has happened in the industry in April, there was a onetime clean-up, which the industry as well as we had done on the number of SIPs which were inactive.

Explains a sequential decline in systematic folios as a one-time industry-wide cleanup, not a fundamental issue with SIP flows.

Asked by Shreya Shivani

ESOP cost for current and next fiscal year Direct
On ESOP cost, the yearly cost expected is in the range of around INR 46 crores... The current quarter cost is around INR 4-odd crores, so INR 11 crores overall for the new segment is INR 4 crores... Next year, it will be around INR 26 crores, INR 27 crores.

Clarifies the ESOP cost trajectory, indicating a lower Q1 cost but higher costs in subsequent quarters to meet the annual guidance, and a significant reduction for the next fiscal year.

Asked by Shreya Shivani

Inflows into passive funds and the new MNC fund Partial
passive as a strategy... we will keep seeding unique ideas in the market... We do not target any volumes in this fund so they predominantly will not show any size coming up. But over the period of time, it builds up as investors start flowing into these passive ideas.

Provides insight into the strategy for passive funds (unique ideas, long-term build-up, not volume-driven) and confirms a 'reasonably good response' for the new MNC fund.

Asked by Mohit Mangal

Increase in ETF yield Direct
on the ETF side, our yields have gone up due to the composition of the various funds in the ETF segments and which has resulted in an improvement in yields where the higher expense scheme has sizably grown.

Explains the reason for the sequential increase in ETF yields, attributing it to a favorable shift in the composition of funds towards higher expense schemes.

Asked by Lalit Deo

Impact and logic behind the SEBI discussion paper on scheme size and new scheme launches Partial
Our view is a little different. We are of the view that it's not about this size, it's more to be able to continue strengthening your research and the risk management capability to remain relevant for investors... it's still a consultation paper, but we do not see any negative in it.

Management's perspective on a significant potential regulatory change, indicating they see it as neutral to slightly positive, focusing on strengthening capabilities rather than just size.

Asked by Madhukar Ladha

Change in customer behavior (brand vs returns) and distribution of flows Direct
investors are maturing a lot... fund performance remains paramount, but that is not the only thing. The brand and the comfort that you get from the brands, that also plays a very big role... it's a package of performance. It's a package of brand and also the service experience.

Highlights management's view on evolving investor behavior, emphasizing the importance of brand and service alongside performance, and notes that flows are 'quite widespread' across various market cap offerings.

Asked by Prayesh Jain

Scope to cut distribution commissions Partial
We do not have a target for that within that, that how much it has to be cut further and all. I think we will continue evaluating... three schemes which are 45% of our equity AUM, we have already cut there.

Indicates ongoing evaluation of distribution commissions, with cuts already made in significant schemes, but no specific future targets or timelines are provided, suggesting potential for further cuts.

Asked by Meghna Luthra

2 min read 7 chapters

Detailed narrative

Q1 FY26 Performance Overview

Nippon Life India Asset Management Ltd (NAM India) reported its highest ever quarterly Operating Profit at INR 3.78 billion and Profit After Tax at INR 3.96 billion in Q1 FY26. The company was the fastest-growing AMC among the Top-10, both on a QoQ and YoY basis, leading to an increase in its overall AUM and Equity AUM market share. Overall market share reached 8.49%, its highest since June 2019.

AUM and Market Share Growth

The company's total assets under management (AUM) stood at INR 7.44 trillion, encompassing Mutual Funds, Managed Accounts, Offshore Funds, and GIFT City. Mutual Fund QAAUM grew by 27% YoY and 10% QoQ to INR 6.13 trillion. Overall market share increased by 23 bps QoQ to 8.49%, and Equity market share increased by 12 bps QoQ to 7.04%.

Systematic Investment Plan (SIP) and Equity Flows

Nippon Life India Asset Management maintained strong momentum in its systematic flows, with the monthly systematic book rising by 29% YoY and 4% QoQ to INR 33.2 billion for June 2025, resulting in an annualized systematic book of INR 398 billion. The SIP market share was 10.07% for June 2025, and the Equity Net Sales market share moved into double-digits for the quarter, well above the Equity AUM market share.

ETF and Digital Franchise Highlights

The company remains a leading ETF player with AUM of INR 1.74 trillion and a market share of 19.76%, an increase of 69 bps QoQ. Its Gold ETF is among the top-10 globally by AUM. The digital franchise saw purchase transactions rise to 3.57 million in Q1 FY26, up 27% YoY, with digital business contributing 75% of total new purchase transactions.

AIF and SIF Business Development

Nippon India AIF raised approximately INR 7 billion in commitments during Q1 FY26, marking its highest quarterly fundraise ever, bringing cumulative commitments to INR 81.0 billion. A new Real Estate Scheme, Nippon India Yield Optimiser, was launched with ~INR 3 billion in commitments. The company is also building a team for the SIF (Special Investment Fund) segment, which is seen as a 'very important category going forward' with product launches expected.

Financial Performance and Yields

Revenue for Q1 FY26 was INR 6.07 billion (up 20% YoY, 7% QoQ), and Operating Profit was INR 3.78 billion (up 23% YoY, 7% QoQ). Profit After Tax stood at INR 3.96 billion (up 19% YoY, 33% QoQ). The blended yield for the quarter was 36 bps, with equity yield at 55 bps and ETF yield at 17 bps. Management expects a 2-3 bps YoY decline in blended yields going forward due to telescopic pricing and increasing AUM size.

Regulatory Landscape and Proprietary Book Strategy

Management discussed the SEBI consultation paper regarding scheme size and new scheme launches, viewing it as neutral to slightly positive, focusing on strengthening research and risk management capabilities. Regarding the proprietary book, the company aims to reduce volatility by shifting allocation 'more on the fixed income side rather than equity' going forward.

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