Shares of Nippon Life India Asset Management Ltd (NAM-India) declined 2.76% to Rs 880 in Wednesday’s early trade (October 29), extending losses in the asset management sector after the Securities and Exchange Board of India (SEBI) proposed changes to mutual fund expense ratios (TER) that could weigh on industry profitability.
Reason for decline: SEBI’s proposal on TER revision
The fall in NAM-India shares comes as SEBI released a consultation paper aimed at rationalising and reducing mutual fund expenses, a move that analysts see as negative for AMCs like Nippon Life India AMC, HDFC AMC, and Aditya Birla Sun Life AMC.
The proposals include:
- Elimination of the additional 5 basis points (bps) that mutual fund schemes were allowed to charge across all categories.
- Revision of the first two expense ratio slabs for open-ended active schemes upward by 5 bps to offset the operational impact.
- Reduction in brokerage charges from 12 bps to 2 bps for cash market transactions and from 5 bps to 1 bps for derivatives.
- Exclusion of statutory levies — such as GST, STT, and Stamp Duty — from the TER to increase transparency and pass cost benefits directly to investors.
The regulator said the move would enhance fairness, simplify compliance, and ensure that investors bear only genuine fund management expenses.
Analyst view: Jefferies flags earnings risk
According to a note by Jefferies, SEBI’s proposal could impact AMCs’ profitability, with an estimated 30–33% decline in FY27 profit before tax (PBT) for major players such as HDFC AMC and Nippon AMC, if the proposed 5 bps cut is implemented.
The brokerage also noted that cuts in brokerage fees may hurt institutional brokers like Nuvama and 360 ONE, while the broader rationalisation of TER is intended to make mutual fund investing cheaper and more transparent.
Stock details
- Current price: Rs 880 (down 2.76%)
- Previous close: Rs 904.95
- Day range: Rs 843.50 – Rs 874.00
- 1-year range: Rs 498.05 – Rs 987.35
- Market cap: Rs 54,986 crore
- P/E ratio: 41.12
- Dividend yield: 2.08%
NAM-India shares have been among the top performers in the AMC space this year, supported by strong mutual fund inflows and expanding assets under management (AUM). However, the latest regulatory proposal has triggered investor caution across the sector.
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