Nippon AMC shares: MOFSL retains 'Buy', sets Rs 1,380 target; key reasons

Motilal Oswal Financial Services (MOFSL) retained its 'Buy' rating on Nippon Life India Asset Management Ltd's stock with a 12-month target price of Rs 1,380. The brokerage expects the company's medium-term growth to be driven by new investor acquisition, deeper geographic penetration and higher wallet share.

In its latest report, MOFSL said Nippon AMC's expanding ETF franchise and diversified distribution network strengthen its overall franchise, while an increasingly institutionalised investment process should support scalability and consistency of performance.

The brokerage expects the company to deliver 18 per cent revenue, 19 per cent EBITDA and 19 per cent PAT compounded annually during FY26-28E.

"Near-term earnings leverage could remain constrained by elevated investments, but the focus on profitable AUM rather than market-share maximisation should support franchise quality and returns over the longer term," MOFSL stated.

The brokerage highlighted Nippon AMC's expansion beyond B30 markets, with the company targeting B100/B200+ markets through an asset-light physical expansion model supported by digital distribution. Early traction in smaller markets also points to scope for deeper penetration and higher investor stickiness.

MOFSL also pointed to the company's distribution network of more than 125,000 mutual fund distributor (MFD) relationships, which provides access to smaller towns where a direct branch presence may not yet be economical.

On the ETF business, the brokerage noted that ETFs now account for around 21 per cent of Nippon AMC's AUM, compared with about 12 per cent in FY20.

It said scale and liquidity, particularly in commodities, strengthen the company's competitive position, while retail participation remains a key differentiator.

Meanwhile, shares of Nippon Life India Asset were trading 0.83 per cent lower at Rs 1,190.25.