Brokerages have largely maintained their buy rating on RelianceNSE 0.36 % Nippon Life Asset Management after the company reported a 34 per cent rise in profit for the three months ended March at Rs 151 crore.
The company’s total income fell to Rs 397.5 crore from Rs 440.2 crore a year ago. CLSA, EmkayNSE 0.00 %, JM FinancialNSE -2.50 % and HDFC Securities have maintained the buy rating on the company.
However, CLSA has slashed its target price on Reliance Nippon by 26 per cent to Rs 230 to factor in lower growth in assets under management (AUMs).
“We lower earnings estimates to factor in weaker growth in AUMs and despite a slower rise in topline, earnings can see mid-teens growth due to lower costs,” said CLSA. The recent change in regulations, especially the switch to slab-wise fees on equity AUMs, will drive down fee income on that pool by 12-13 basis points, it said. CLSA added that this can be managed since a large part of the reduction has been passed on to distributors as lower brokerages, and it sees headroom to control discretion ..
Reliance Nippon has seen a 17 per cent plus decline in debt AUMs in the past six months impacted by a liquidity crisis and exposures to its group companies through Rs 380 crore of Investment Corporation of Dubai (ICD), and Rs 1,750 crore of scheme exposures. Nomura said they remain a key risk to flows and can impact profitability.
For more information in stock market Top 10 Stock Advisory Company Indore
The company’s total income fell to Rs 397.5 crore from Rs 440.2 crore a year ago. CLSA, EmkayNSE 0.00 %, JM FinancialNSE -2.50 % and HDFC Securities have maintained the buy rating on the company.
However, CLSA has slashed its target price on Reliance Nippon by 26 per cent to Rs 230 to factor in lower growth in assets under management (AUMs).
“We lower earnings estimates to factor in weaker growth in AUMs and despite a slower rise in topline, earnings can see mid-teens growth due to lower costs,” said CLSA. The recent change in regulations, especially the switch to slab-wise fees on equity AUMs, will drive down fee income on that pool by 12-13 basis points, it said. CLSA added that this can be managed since a large part of the reduction has been passed on to distributors as lower brokerages, and it sees headroom to control discretion ..
Reliance Nippon has seen a 17 per cent plus decline in debt AUMs in the past six months impacted by a liquidity crisis and exposures to its group companies through Rs 380 crore of Investment Corporation of Dubai (ICD), and Rs 1,750 crore of scheme exposures. Nomura said they remain a key risk to flows and can impact profitability.
For more information in stock market Top 10 Stock Advisory Company Indore
0 Comments