• The outlook for the mutual fund market ahead looks strong, and thus BOB Capital Markets has a Buy recommendation on two mutual funds. These are Nippon AMC and UTI AMC.
The Indian Mutual Fund market is seen set for 11% CAGR during FY 22-27 driven by increase in financial savings, product literacy and digitization. The performance of Systematic Investment Plans (SIPs) has shown resilience, while the equity fund market has seen a boom in 2022 despite volatile markets. With strong fundamentals in the mutual fund market going forward, brokerage BOB Capital Markets has BUY recommendation on two mutual funds. These are Nippon AMC and UTI AMC.
In its research note, BOB CAP said, "After a strong 18% CAGR in QAUM from FY2015-FY22 to ₹38 trillion, we expect the Indian mutual fund (MF) industry to grow in FY27 Will end at ~₹64 trillion, clocking 11% CAGR over FY22-FY27.
Among the major growth catalysts are higher financial savings, wider regional penetration, ease of investing online, and growing awareness about mutual funds.
In 2022, total net inflows into all mutual funds came to ₹71,443 crore, with positive inflows into equity schemes (₹1.61 lakh crore), index funds and ETFs (₹1.65 lakh crore), and negative inflows into debt schemes (₹) . 2.5 lakh crore) collectively from the open and close-ended categories. SIP inflows during the year stood at around ₹1,49,437 crore.
According to BOB CAP, the steady growth in equity QAAUM has led to a rapid growth in mutual funds - from a total of 30% in FY2012 to 46% in FY22 and 48% in H1FY23. Net equity inflows have remained positive since FY21, except in FY21, reaching a peak of ₹2.7 trillion in FY22. Systematic Investment Plans (SIPs) have played an important role in driving growth.
Further, it was reported that the share of individual (retail + HNI) investors in MF industry MAAUM has increased from 46% in FY17 to 55% in FY22 and 57% in H1FY23. While institutional AUM has registered a CAGR of 11% over the last five years, individual investors have grown at a faster pace of 20% due to demand from equity funds and HNIs.
Following the above, the brokerage has initiated coverage on Nippon AMC and UTI AMC.
Nippon AMC:
According to BOBCAP, Nippon AMC, the 4th largest fund house in India by Monthly Average AUM (MAAUM), has successfully leveraged its first-mover advantage in Exchange-Traded Funds (ETFs) and 71%/60% Commanded the volume/folio. Section.
Nippon AMC has maintained 7% MAAUM market share in FY21-H1FY23, especially after the acquisition of Nippon Life in Sep'19. Further, despite being a non-bank affiliated entity (no captive customers), the company has built a strong retail franchise accounting for 29% MAAUM at the end of FY2023 versus the industry average of 25%. Equity Large- and Small-Cap categories.
That being said, the BOBCAP note said, "We expect quarterly average AUM (QAAUM) to log 10% CAGR over FY22-FY25 from ₹2.8 trillion to ₹3.7 trillion, with a proportion of equity at 45% and ETF at 26%." At the end of FY25. The stock is currently trading at 17x FY25E EPS. We initiate coverage with BUY and TP of ₹347, assigning a P/E multiple of 24x to FY25E EPS to the stock - One standard deviation below the long-term mean multiple.
UTI AMC:
This mutual fund is the eighth largest fund house in India with a QAUM of ₹2.3 trillion ---- on account of continuous positive net inflows since FY2021.
As per the brokerage's note, UTI AMC has gained market share from 7.5% to 5.4% in FY17-FY20, but lagged listed peers ABSL AMC (-190bps) and HDFC AMC (-270bps) in FY20.
In the non-mutual fund business (offshore, pension, private equity and venture funds), the brokerage believes that UTI AMC has a significant market share as one of the only two fund houses appointed to manage the Employees' Provident Fund Fund of India. There is profit.
Thus, BOBCAP's note said, "We model a 10% CAGR in QAAUM from FY22-FY25 to ₹3tn, with the proportion of equities rising to 43% and ETFs to 33% at the end of FY25." The stock is currently trading at 15x FY25E Earnings. We initiate coverage with Buy and set a TP of ₹983 at 18x FY25E EPS - the stock's long-term mean multiple and one below the mean standard deviation between.
No comments:
Post a Comment