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We hereby present you our fundamental stock idea of the week i.e “Pick of the Week”. A thorough analysis of company, industry and economy goes behind our stock ideas for you. With the “Pick of the Week”, you may earn superior returns over a time horizon of 6 - 9 months.

INVESTING RATIONALE

• Reliance Nippon Life Asset Management Ltd is a unique and currently the only listed play in a highly underpenetrated Indian mutual fund market. Besides being one of the largest Asset Management Company (~Rs 3.9 lac cr) and having ~11% market share in MF, it is also ranked the 3 rd most profitable AMC in the country.

• RNAM is one of the largest AMC in India with a total AUM of ~Rs 3.9 lac cr. It is the only private AMC in India holding mandates to manage funds of EPFO, NPS and CMPFO.

• Well diversified: RNAM has a well-diversified product suite across mutual funds and ETFs, managed accounts and offshore funds and advisory mandates. The company also manages offshore funds, which enable them to cater to investors across Asia, Middle East, UK, US, and Europe.

• Growing SIP book: Despite being a non-bank-backed player, RNAM has built a strong portfolio of ~2 million SIP accounts and SIP book of ~ Rs 649 cr.

• We expect RNAM MF AUM to grow at 25% CAGR over FY17-20E led by Equity AUM (35% CAGR over FY17- 20E) due to improved inflows from B15 cities and higher retail participation in equity schemes through SIP, etc.

• We maintain a BUY with a target of Rs. 272.