Interview with Prateek Jain, CFO, Nippon Life India Asset Management Ltd


07 Aug, 2023

3 min read


Interview with Prateek Jain, CFO, Nippon Life India Asset Management Ltd
Over the past few years, we have been on a relentless journey of building a user-centric digital ecosystem that is not just frictionless, but also friendly and futuristic, says Prateek Jain, CFO, Nippon Life India Asset Management Limited.

Nippon Life India Asset Management’s revenue from operations climbed 12 per cent to Rs 354 crore, while the company's net profit zoomed 107 per cent on a YoY basis to Rs 236 crore. What were the factors responsible for the company’s performance?   

NAM India is a true-blue diversified asset manager with total Assets Under Management of Rs 4.04 trillion (USD 49 billion) as of June 30, 2023. In Q1 FY24, NAM India’s revenue growth of 12% YoY has been in-line with AUM growth of 12%. AUM growth, especially in the equity segment, has been driven by strong scheme performance which has now started to translate into market share gains. Further, this has been aided by our strong focus on SIPs and there has been a steady uptick in our systematic flows over the past 8 quarters, from Rs 5.9 billion per month in Jun-2021 to Rs 12.2 billion per month in June-2023.  

We now have an annualized systematic book of INR 147 bn and expect this SIP juggernaut to snowball further. On the segmental front, we have been focusing on growth in the HNI segment and this has started to bear fruit (market share increased 19bps QoQ to 5.99%). On the operating expense front, we were able to control growth to lower than revenue growth leading to a 13% YoY growth in core operating profit. Higher growth in net profit was also driven by higher other income owing to an increase in the value of equity investments driven by equity market performance and downward movement of rates which led to mark-to-market gains on our debt investments. 

How does your company plan to further enhance and strengthen the digital ecosystem to simplify the investment experience and create a frictionless environment for your investor partners?   

NAM India remains focused on its digital infrastructure, with our platform being a partner of choice to customers, distributors and fintech partners alike. Over the past few years, we have been on a relentless journey of building a user-centric digital ecosystem that is not just frictionless, but also friendly and futuristic. We have in place a robust framework of digital experiences and journeys that straddle across segments – Retail & Institutional Investors, Distributors, and Partners – and across platforms – web, native and open – which help us serve a multitude of users in line with their preference and proficiency. This approach has helped us reach a state where digital is a cornerstone of our growth and future scalability & expansion.  

With this deep-rooted foundation in place, we are now ready to shift gears. We believe that deep data integrations and real-time, intelligent interventions will help us drive deeper and more meaningful engagements with the users of our digital platforms and we are already in advanced stages of implementation on this front. Our strategy simply articulated is Voice, Video, Vernacular and Bharat. We as an organisation have implemented LEAP. Our Digital LEAP (Leverage, Evolution, Access, and Privacy) doctrine across the organization and our franchise which in turn is amplifying our vision to be Trusted, Agile and Future Ready for our Investors.  Digital purchase transactions rose to 1.06 million in Q1 FY24, up 42% YoY. This is the first time that digital transactions crossed 1 mn in a quarter. Our digital franchise contributed 57% to total purchase transactions in Q1 FY24, and we had 11 new digital purchases every minute.   

On the remarkable achievement of being recognized as the fastest-growing Asset Management Company (AMC) in B-30 locations, what key strategies do you attribute to your exceptional growth in B-30 locations, and how do you plan to sustain this momentum going forward?   

B-30 locations have always been a focus area for us given that these have a higher proportion of Equity AUM. The higher growth for us in B-30 locations has largely been a function of our vast distribution network. We have a wide presence through 270 locations in the country and we have over 93,000 distributors, including over 92,800s MFDs, which is one of the largest distributor bases in the country. Further, given that we have a higher share of our AUM from Mutual Fund Distributors which have a higher presence in these locations than the larger bank distributors and national distributors, we draw a larger proportion of our AUM from these areas i.e. ~19% versus 17% average for the industry. NAM India has also focused on creating brand awareness in these areas using ads in local media as we believe in investing for future growth in ‘Bharat’. This has helped us to be one of the fastest-growing large AMCs in these locations. Our B-30 AUM grew 13% QoQ to INR 631 bn in Q1FY24 with market share increasing by 19bps QoQ to 8.33%. 

Read more: Nippon Life India Mutual Funds Schemes

Can you shed some light on the performance of AUM in the current quarter? What is the AUM target for the next few quarters? 

We closed the quarter with total assets under management of Rs 4.04 trillion. This includes Mutual Funds, Managed Accounts and Offshore Funds. Our Mutual Fund QAAUM grew 7% QoQ & 12% YoY to reach Rs 3.14 trillion. Equity AUM grew 7.4% QoQ aided by higher net sales, upward movement in the equity market, and strong performance over the last 2 years, while Debt AUM grew 19.1% QoQ after the outflows witnessed in the last quarter of FY23. NAM India remains a leader in the ETF space with a market share of 13.9%, growth was 5.4% QoQ. In terms of a longer-term trend, over FY13-23, our AUM has grown at a 12% Cagr, with Equity AUM having grown faster at a 16% Cagr and this is the sort of growth we would try to maintain going forward as well.

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