Nippon Life India Asset Management Limited delivered exceptional financial performance in Q3 FY26, reporting its highest-ever quarterly operating profit and profit after tax. The asset manager of Nippon India Mutual Fund announced consolidated profit after tax of ₹403.90 crore for the quarter ended December 31, 2025, representing a robust 37% year-on-year growth from ₹295.36 crore in Q3 FY25.

Financial Performance Highlights

The company's consolidated financial results demonstrate strong operational efficiency and market expansion. Total income increased to ₹780.55 crore in Q3 FY26 compared to ₹603.30 crore in the corresponding quarter of the previous year.

For the nine months ended December 31, 2025, the company reported consolidated profit after tax of ₹1,144.66 crore, up 16% from ₹987.79 crore in the corresponding period of FY25.

Assets Under Management Growth

The company's asset management business showed remarkable expansion across multiple segments. As of December 31, 2025, total assets under management stood at ₹8.16 trillion. The mutual fund quarterly average assets under management (QAAUM) reached ₹7.01 trillion, marking a 23% year-on-year increase.

Market Share Expansion

The company strengthened its market position across key segments during the quarter. Mutual fund market share increased by 35 basis points year-on-year to 8.65%, while equity market share rose 11 basis points to 7.13%. The company achieved significant growth in the ETF segment, with market share expanding 217 basis points to 20.31%.

The company maintains the largest unique investor base in the industry at 22.7 million investors, representing a market share of 38.4%. Systematic flows for Q3 FY26 reached ₹109.8 billion, up 11% year-on-year, resulting in an annualized systematic book of approximately ₹451 billion.

Board Decisions and Corporate Developments

The Board of Directors approved the re-appointment of Mr. Balasubramanyam Sriram as Independent Director for a second term of five consecutive years effective March 15, 2026. Mr. Sriram, aged 67 years, brings extensive banking and finance experience, having served as Managing Director & CEO of IDBI Bank Ltd and Managing Director of State Bank of India.

The company also reported allotment of 4,44,934 equity shares during the quarter pursuant to exercise of stock options by employees. An interim dividend of ₹9.00 per equity share was approved and paid on November 14, 2025.

Regulatory and Operational Updates

The company continues to address regulatory matters, including ongoing engagement with SEBI regarding a show cause notice received in September 2024. Management believes the company has complied with relevant guidelines and is actively participating in settlement proceedings.

The implementation of new Labour Codes effective November 21, 2025, resulted in an incremental expense of ₹5.98 crore against gratuity obligations. The company maintains its focus on expanding geographical presence with operations at 271 locations across India and growing digital transaction volumes to 4.32 million in Q3 FY26.

India is entering a cyclical earnings recovery that could see it outperform most emerging markets over the next two years, even as concerns persist around valuations and foreign investor outflows, according to Jonathan Garner, Chief Asia & Emerging Market Strategist and Chairman of Asset Allocation at Morgan Stanley.

Earnings Growth Acceleration Expected

Speaking to ET Now, Garner highlighted that Indian earnings growth has been weaker than widely assumed, creating room for a significant rebound. The Morgan Stanley strategist revealed that broad market earnings growth has been closer to 5.00-7.00% for the Sensex in the year just ended, setting the stage for improvement.

"We now see a cyclical upswing coming, with mid- to high-teens earnings growth over the next two years," Garner said, adding that this would likely exceed earnings growth across emerging markets overall.

Valuation Concerns Ease on Forward Metrics

Addressing concerns that India's growth is already priced in, Garner noted that valuation premiums have narrowed sharply. Based on a two-year forward target of 95,000.00 for the Sensex, Indian equities are trading at around 18.00 times forward earnings, compared with roughly 13.00 times for emerging markets in aggregate.

"At the peak, India was trading at nearly twice EM valuations. That gap has compressed meaningfully," he explained. Despite sustained foreign institutional investor outflows, dedicated emerging market funds are now slightly underweight India—the most negative positioning in nearly a decade, which could set up potential for flow reversals if the earnings cycle turns.

Policy Support and Capex Revival Drive Recovery

Garner attributed the anticipated earnings upswing to multiple domestic factors that are aligning favorably:

• Monetary easing by the Reserve Bank of India
• Improving regulatory conditions
• Early signs of revival in the capital expenditure cycle
• Inflation tracking below 2.00%, creating room for policy support

He acknowledged that nominal GDP growth has been weak despite strong real GDP growth, but emphasized that low inflation provides scope for policy support measures.

Fiscal Position Remains Strong

On fiscal risks ahead of the Union Budget, Garner said India is likely to pursue modest fiscal consolidation, targeting a deficit of around 4.20% of GDP. He described India's macro position as "very strong," citing:

"These factors make India an interesting and relatively resilient story in a very uncertain global environment," Garner noted.

Sector Preferences and Investment Strategy

Within Indian equities, Morgan Stanley maintains an overweight position on financials, industrials and consumer discretionary stocks. Garner highlighted India's young and urbanising population as continuing to support modern consumption patterns, making it "somewhat unique among large global economies."

However, the firm expressed caution on IT services stocks, citing uncertainty around how artificial intelligence adoption could affect traditional revenue models. "IT services is not a sector we are particularly enthusiastic about at this stage," he said.

Within financials, Morgan Stanley prefers private sector banks and non-bank financial companies over PSU banks, highlighting potential for AI-led cost efficiencies to drive profitability. The firm's focus list includes ICICI Bank and Bajaj Finance.

Global Context and Market Positioning

Comparing India with China, Garner noted that China's nominal GDP growth remains weak and lacks clear catalysts for broad cyclical recovery. On commodities, Morgan Stanley remains constructive on gold, driven by rising demand for real assets amid high global debt levels.

While Morgan Stanley has reduced risk exposure after four years of Indian market outperformance, India remains one of the firm's preferred markets for the year ahead, alongside Brazil, the UAE and Singapore. "The key question is whether this cyclical downturn in India—which surprised us in its intensity—now abates and improves. If it does, India should once again stand out within the Asia and emerging market universe," Garner concluded.