Among India’s Listed AMCs, This One Had the Strongest Quarter. But How Much Is in the Price.

Best-in-class PAT growth, consistent equity flow market share, and a gold and silver ETF franchise quietly doing heavy lifting 

In a quarter where markets were weak and most asset managers were navigating headwinds from softer equity AUM and regulatory uncertainty around expense ratios, Nippon India AMC stood out. PAT growth of 29% year-on-year was, by JM Financial’s own assessment, “expectedly the best amongst the AMCs.” The result was driven by a combination of strong ETF traction, yield stability in an otherwise difficult environment, and a lower-than-expected tax rate that added a final layer of outperformance.

A Different Quarter

The quarter’s standout was not the equity business — equity QAAUM was broadly flat sequentially. It was the commodity ETF franchise. Gold and silver ETFs saw strong inflows and mark-to-market gains, and crucially, they carry higher yields than the blended portfolio — gold ETFs at 0.6% of AUM and silver at 0.3%, both above the blended average.

As these funds grew, they pulled the overall yield slightly higher, to 0.41% of QAAUM from 0.40% the previous quarter — a modest move, but one that mattered in a quarter with two fewer calendar days and weak market conditions.

Two Debt Index Fund NFOs launched during the quarter, garnering Rs 8.6 billion, added further support to yield stability. “While the commodity ETFs have hogged the limelight,” the JM Financial report notes, the AMC also maintained equity flow market share in the high single digits — 9-10% by the brokerage’s estimates — against a book market share of 7%. An AMC consistently bringing in more than its existing share implies a business that is actively gaining ground in the industry.

The Regulatory Question

SEBI’s updated mutual fund regulations on total expense ratios have been a source of anxiety across the AMC sector. For Nippon, management has called out a 3-4 basis point impact on yields — consistent with what peers are seeing. The difference is in how the company is positioned to absorb it. JM Financial describes Nippon as being largely “isolated from SEBI TER norms” relative to peers, given its distribution mix and the structure of its expense pass-through. Management is actively working to minimise the P&L impact, and the brokerage’s estimates already factor in a degree of yield pressure going forward.

On operating expenses, the picture is clean. Costs were flat sequentially and in line with estimates. ESOP costs for FY26 came in at Rs 430 million, with guidance of Rs 350 million for FY27 — slightly above earlier estimates but not materially so. Excluding ESOPs, management expects operating expenses to grow at approximately 15% year-on-year in the near term — a rate that should remain comfortably below revenue growth as AUM compounds.

Earnings Compounding 

JM Financial raises its FY27 and FY28 EPS estimates by approximately 4% each, and now expects Nippon to compound earnings at 18% CAGR over FY26-28. The drivers are straightforward: sustained industry inflows, consistent equity flow market share, and the gradual accrual of revenues from the AIF and SIF businesses as they scale. These newer businesses are nascent today but represent genuine optionality for a franchise that has already demonstrated it can build category leadership — as it has done in commodity ETFs.

“While NAM outperformed HDFC AMC on earnings growth in FY26,” the report notes, JM Financial expects HDFC AMC to outperform on earnings over FY26-28, particularly given the stricter stance on passing expense ratio cuts to intermediaries. Nippon’s 18% earnings CAGR remains strong in absolute terms — it is a relative framing, not a criticism of the business.

What JM Financial Thinks It Is Worth

The valuation at 33x FY28E earnings sits above the stock’s historical mean P/E and at a premium to HDFC AMC — a premium that JM Financial is comfortable with given Nippon’s consistent market share gains in equity and its commodity ETF leadership.