Jefferies bullish on Nippon AMC: Maintains ‘Buy’, sees 25% operating income CAGR, projects 25% upside potential

Jefferies has reiterated its Buy rating on Nippon AMC, revising its target price to ₹820 from ₹850. The brokerage foresees a potential upside of nearly 25% from the current market price of ₹653.35.

Key Takeaways:

Advertisement

  1. Stable Core Business Performance:
    Nippon AMC’s core operations remain strong, reflecting consistent performance in challenging market conditions.
  2. Commission Rejig to Boost Yields:
    Adjustments in commission structures are expected to aid overall yields, contributing to better margins for the company.
  3. Superior SIP Retention:
    The company has demonstrated better SIP retention rates compared to the industry, highlighting its strong client engagement and loyalty.
  4. EPS Estimates Revised:
    Jefferies has lowered its EPS estimates by 4-10%, citing MTM (mark-to-market) impacts, AUM growth, and slower decay.
  5. Strong Future Growth:
    The brokerage projects an impressive 25% CAGR in operating income between FY25-27, underscoring Nippon AMC’s growth potential in the asset management sector.

Outlook:

Jefferies remains optimistic about Nippon AMC’s long-term growth trajectory, backed by stable business performance and strategic initiatives. The revised target price reflects confidence in the company’s ability to navigate market challenges while capitalizing on growth opportunities.

Current Market Performance:

With a CMP of ₹653.35, Nippon AMC offers significant growth potential for investors looking at the asset management space.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please consult your financial advisor before making investment decisions.