Indian Asset Managers: The year of SMID; Raising Nippon AMC valuations + Model update

Research evidence excerpt

Indian Asset Managers: The year of SMID; Raising Nippon AMC valuations + Model update

per our estimates.

NIPPON AMC - THE YEAR OF SMID; PRIORITIZING SMID GROWTH OVER CONCENTRATION RISKS

We revise our model assumptions for Nippon AMC (NAM) upward for FY27 and beyond, to reflect Q4FY26 trends and account

for sharp pickup in the SMID segment observed in FY27YTD (April/May-26). Given Nippon AMC's AUM mix is skewed towards

SMID relative to peers, the AMC stands to benefit from the recent outperformance of SMID indices. We hike our mark to market

and flows assumptions, resulting in higher earnings estimates for the stock.

We bake in ~20% MTM gains for FY27 (~13% increase in Q1FY27 closing equity AuM based on current trends and a ~7% for

the rest of FY27). The ~13% increase in Q1FY27 closing equity AuM reflects a ~15-20% SMID index gains in FY27YTD (April/

May/Jun-26). We also raise our flow estimates for FY27, driven by stronger-than-expected flows into Nippon AMC as seen in

our in-house proprietary flows model. Further, we adjust the classification of active equity AuM in the model to include arbitrage

funds, equity index funds, and fund of funds (a gap in our previous classification aligned with company classification for reported

average AuM).

As a result, our FY27 annual average equity AUM is now ~17% higher than our previous estimates (~13% on account of MTM

gains in Q1FY27, and the rest from higher than expected closing FY26 AuM, higher flows assumptions for FY27). For FY28–

29, we maintain our MTM assumption at ~11% (in line with nominal GDP) and flow assumption at ~14% of opening AuM.

However, given the higher FY27 closing AUM base (higher MTM, higher flows & reclassification), FY28/29 annual average

equity AUM also sees an uplift relative to our prior estimates.