Reliance Nippon Life Asset Management Ltd.

IPO Note: Reliance Nippon Life Asset Management Ltd. Industry: BFSI Recommendation: Subscribe Date: October 23, 2017 Issue Snapshot Company Name Reliance Nippon Life Asset Management Ltd. Issue Opens October 25, 2017 to October 27, 2017 Price Band Rs. 247 to Rs. 252 Bid Lot The Offer Issue Size IPO Process 59 Equity Shares and in multiples thereof. Public issue of 61,200,000 Equity shares of Face value Rs. 10 each, (Comprising of fresh issue of 24,480,000 Equity Shares* (Rs. 616.90 cr*) and Offer for Sale of 36,720,000 Equity Shares (Rs. 925.34 cr) by Selling Shareholder). Rs. 1511.64 1542.24 Crore 100% Book Building Face Value Rs. 10.00 Exchanges BRLM Registrar NSE & BSE JM Financial Institutional Securities Limited, CLSA India Private Limited, Nomura Financial Advisory and Securities (India) Private Limited, Axis Capital Limited, Edelweiss Financial Services Limited, IIFL Holdings Limited, SBI Capital Markets Limited and YES Securities (India) Limited Karvy Computershare Private Limited Objects of the Offer Offer for Sale The Company will not receive any proceeds from the Offer for Sale by the Selling Shareholder (upto 25,489,800 Equity Shares by Nippon Life and up to 11,230,200 Equity Shares byreliance Capital). Company Highlights Issue Break up Issue Size Allocation Equity Shares* QIB 50% 30,600,000 HNI 15% 9,180,000 RII 35% 21,420,000 Fresh Issue Total Public 100% 61,200,000 Setting up new branches and relocating certain existing branches (Rs. 38.31 cr.); Upgrading the IT system (Rs. 40.65 cr.); *Based on higher price band @ Rs. 252 Advertising, marketing and brand building activities (Rs. 72.09 cr.); Lending to company's subsidiary (Reliance AIF) for investment as continuing interest in the new AIF schemes managed by Reliance AIF (Rs. 125 cr.); Investing towards company's continuing interest in new mutual fund schemes managed by them (Rs. 100 cr.); Funding inorganic growth and other strategic initiatives (Rs. 165 cr.); and Meeting expenses towards general corporate purposes. Reliance Nippon Life Asset Management Ltd. (RNLAM) is one of the largest asset management companies in India, managing total AUM of INR 3,625.50 billion as of June 30, 2017. It is involved in managing (i) mutual funds (including ETFs); (ii) managed accounts, including portfolio management services, alternative investment funds ( AIFs ) and pension funds; and (iii) offshore funds and advisory mandates. It was ranked the third largest asset management company, in terms of mutual fund quarterly average AUM ( ) with an overall market share of 11.4%, as of June 30, 2017 (Source: ICRA). For the financial year 2016, it was ranked the second most profitable asset management company in India, (Source: ICRA). It started mutual fund operations in 1995 as the asset manager for Reliance Mutual Fund, managed of Rs. 2,229.64 billion and 7.01 million investor folios, as of June 30, 2017. It managed 55 open-ended mutual fund schemes including 16 ETFs for Reliance Mutual Fund as of June 30, 2017. It has a pan-india network of 171 branches and approximately 58,000 distributors including banks, financial institutions, national distributors and independent financial advisors, as of June 2017. As part of its managed accounts business, it provides portfolio management services to high net worth individuals and institutional investors including the Employees Provident Fund Organisation ( EPFO ) and Coal Mines Provident Fund Organisation ( CMPFO ). Its subsidiary, Reliance AIF Management Company Limited ( Reliance AIF ) manages two alternative 1

investment funds, which are privately pooled investment vehicles registered with SEBI. Further, it received a certificate of commencement of business as a pension fund manager from the Pension Fund Regulatory and Development Authority ( PFRDA ) in 2009 and manages pension assets under the National Pension System ( NPS ). As of June 30, 2017, it managed total AUM of INR 1,503.93bn as part of its managed accounts business. The Company manages offshore funds through its subsidiaries in Singapore and Mauritius and has a representative office in Dubai, which enables it to cater to investors across Asia, Middle East, UK, US, and Europe. As of June 30, 2017, it managed total AUM of INR 22.07 bn as part of its offshore fund management portfolio. It also acts as the advisor for India focused equity and fixed income funds in Japan and South Korea. Further, as of June 30, 2017, it managed INR 52.77 billion of international advisory mandates. View Incorporated in 1995 as the asset manager for Reliance Mutual Fund, Reliance Nippon Life Asset Management is one of the largest asset management companies in India, managing total AUM of Rs 3,625.5 billion as of June 30, 2017. Company is engaged in managing mutual funds (including ETFs), managed accounts, alternative investment funds (AIFs), pension funds, offshore funds and advisory mandates. In Indian mutual fund industry, company is ranked the 3rd largest asset management company in terms of mutual fund quarterly average AUM with a market share of 11.4% as of June 30, 2017. It maintained Quarterly Average AUM of Rs 2229.6 billion and has 7.01 million investor folios. Company has strong pan India distribution network of 171 branches and ~58,000 distributors including banks, financial institutions, national distributors and independent financial advisors. Besides, company has widespread investor base and long-standing relationships with distributors and investors. Company s robust investment track record across multiple market cycles has driven its growth over the years. The AMC also operates separate business verticals, which focuses on developing the business with PSU banks to leverage rural networks for widespread distribution of products. Apart from that, company also has dedicated team to cater to the investment requirements of HNI investors. Company also manages offshore funds, which enable the company to cater to investors across Asia, Middle East, UK, US and Europe. Since, NDA government came into power in 2014, Indian equity market has been witnessing dream run on backdrop of improving economic growth, increasing infrastructure activities and declining inflation. Nifty rose 63% since 2014, thus luring investors to park their money in equity market in bid to earn higher return. Declining inflation and lower credit growth compels Central Bank to slash the lending rates and that has been transferred to the economy by banks through reducing both lending and savings rate. Banks are continuously slashing their deposit rates in order to improve their net interest margins. Also the recent demonetization step by Government to curb the black money had created an abundance of liquidity in the banking system. Thus the shift of investment pattern of investors from traditional fixed deposit to equity markets has boosted the growth of Asset management companies as the retail investors prefer Mutual fund channel to invest in the equity market owing to its large investment pool and better risk management. Equity mutual funds received a staggering Rs 20,000 crore in net investment flows in August 2017, while the overall assets under management (AUM) topped the Rs 20-lakh crore mark. The record flows cemented the belief that the industry is going through a structural uptrend due to improvement in financial savings and dimming appeal of traditional asset classes such as gold and real estate. The higher flows helped money managers deploy more capital in the markets, thus taking the benchmark index to new high every day. Currently, there are over 15 million systematic investment plans (SIPs) registered - mostly equity oriented. And the monthly SIP inflows stand at Rs 5,000 crore. So far in 2017, total net inflow in MF industry (both equity and debt) was Rs 2,47,812 crore, thus taking the total AUM of the MF industry to Rs 20,59,289 crore. Industry experts believe that such flow of money through mutual fund will sustain in future also owing to structural shift in financial savings from traditional gold, real estate and fixed deposit to equity investments. Reliance Nippon Life AMC, being the 3rd largest AMC is well placed to ride on the wave of growth in the industry. On financial front, in past 5 years, company had posted a revenue CAGR growth of 21%, while EBITDA grew at a CAGR of 28%. Net profitability during the same period grew at a CAGR of 15%. On valuation front, at higher price band the issue is valued at 4.25% (Market cap to AUM ratio) of its AUM (as of June 30, 2017), which is quite compelling given the deal which happened historically in Mutual Fund Industry. Given its brand, market share, strong momentum in equity market and improving domestic macro factors, we recommend our investors to SUBSCRIBE the issue from long term investment perspective. 2

AUM Mutual funds including ETFs 81,473 94,489 129,400 146,142 203,587 209,950 Managed accounts 72,255 85,109 101,486 124,695 145,263 150,393 Offshore funds and advisory mandates 6,317 4,970 6,039 4,327 1,905 2,207 Total end of period AUM 160,045 184,568 236,925 275,164 350,755 362,550 Particulars () FY15 FY16 FY17 Q1FY18 Equity 35,951 28.9 48,981 32 53,360 28.2 64,410 28.9 Debt (Liquid) 29,001 23.3 32,299 21 36,216 19.2 41,564 18.6 Debt (Others) 57,494 46.2 70,151 45.8 93,888 49.6 102,840 46.1 ETF 338 0.3 453 0.3 3,744 2 11,475 5.2 Gold 1,723 1.4 1,369 0.9 1,953 1 2,674 1.2 Total 124,507 100 153,251 100 189,161 100 222,964 100 AUM customer wise Retail 9276 14038 27307 34050 52657 58370 Corporate 45165 54764 70710 85788 111850 114460 HNI 34018 30707 36373 31743 36516 36922 Other institution AUM (including banks/fi, FII/FPI) 3511 3853 7125 8454 12645 10833 Total MAAUM 91970 103363 141514 160035 213668 220585 % of Total MAAUM Retail AUM (%) 10.1 13.6 19.3 21.3 24.6 26.5 Corporate AUM (Excl Banks/FI, FII/FPI) (%) 49.1 53 50 53.6 52.3 51.9 HNI AUM (%) 37 29.7 25.7 19.8 17.1 16.7 Other Institution AUM (Banks/FI, FII/FPI) (%) 3.8 3.7 5 5.3 5.9 4.9 Retail Folio Count 6064209 5305279 5363027 5691362 6576793 6724167 Per ticket Size (INR) 40044 47630 62651 73361 94689 98838 Management fees by fund type Particulars () FY15 FY16 FY17 Q1FY18 Average Fee Average Fee Average Fee Average Fee Equity 510.9 1.42% 702.1 1.43% 720.7 1.35% 205.2 1.29% Debt (Liquid) 18.0 0.06% 18.7 0.06% 30.8 0.09% 3.9 0.04% Debt (Other) 248.3 0.43% 386.1 0.55% 449.7 0.48% 122.9 0.48% ETF 0.7 0.20% 0.8 0.17% 7.1 0.19% 3.7 0.13% Gold 16.5 0.95% 13.2 0.97% 18.5 0.95% 6.5 0.99% Total 794.3 0.64% 1,120.9 0.73% 1,226.7 0.65% 342.2 0.60% 3

Financial Statement Share Capital 11.5 11.3 41.3 41.5 41.5 41.5 Net Worth 1457.7 1554.1 1536.0 1791.9 1892.6 1680.3 Non Current Liabilities 2.9 2.5 3.3 7.5 11.6 13.5 Current Liabilities 96.6 148.5 153.4 122.5 147.1 234.4 Fixed Assets 20.0 14.2 7.1 11.9 251.1 245.1 Non Current Assets 1100.9 426.6 716.8 921.7 749.4 756.8 Current Assets 440.2 1268.1 977.7 997.2 1050.7 926.2 Total Assets 1561.1 1708.9 1701.6 1930.8 2051.3 1928.1 Revenue from Operations 608.7 675.9 847.2 1200.1 1307.5 364.4 Revenue Growth (%) 11.0 25.4 41.6 9.0 EBITDA 175.9 241.2 362.8 413.0 470.8 108.1 EBITDA Margin (%) 28.9 35.7 42.8 34.4 36.0 29.7 Net Profit 230.4 270.6 354.5 396.4 402.8 87.8 Net Profit Margin (%) 37.8 40.0 41.8 33.0 30.8 24.1 Earnings Per Share (Rs.) 207.5 245.1 320.6 344.1 349.6 76.0 Return on Networth (%) 16.0 17.0 23.0 22.0 21.0 5.0 Net Asset Value per Share (Rs.) 1265.0 1349.0 1307.0 1529.0 1617.0 1433.0 Cash Flow Statement Cash flow from Operations Activities 48.0 177.3 (42.1) 218.1 556.5 100.0 Cash flow from Investing Activities 164.3 14.3 444.6 (28.5) (294.2) 189.0 Cash flow from Financing Activities (187.4) (188.9) (404.0) (173.7) (300.3) (249.5) Net increase/(decrease) in cash and cash equivalents 29.7 10.0 (5.0) 19.3 (39.8) 39.6 Cash and cash equivalents at the beginning of the year 25.5 55.2 65.2 60.2 79.5 39.7 Cash and cash equivalents at the end of the year 55.2 65.2 60.2 79.5 39.7 79.4 Source: RHP Comparison with listed industry peers There are no listed companies in India that engage in the similar line of business. Hence, it is not possible to provide an industry comparison in relation to the Company. 4

Research Team Name Designation Email ID Contact No. Paras Bothra President Equity Research paras@ashikagroup.com +91 22 6611 1704 Krishna Kumar Agarwal Equity Research Analyst krishna.a@ashikagroup.com +91 33 4036 0646 Partha Mazumder Equity Research Analyst partha.m@ashikagroup.com +91 33 4036 0647 Arijit Malakar Equity Research Analyst amalakar@ashikagroup.com +91 33 4036 0644 Kapil Jagasia Equity Research Analyst kapil.j@ashikagroup.com +91 22 6611 1715 Tirthankar Das Technical & Derivative Analyst tirthankar.d@ashikagroup.com +91 33 4036 0645 Ashika Stock Broking Limited ( ASBL ) or Research Entity has started its journey in the year 1994 and is engaged in the business of broking services, depository services, distributor of financial products (Mutual fund, IPO & Bonds). This research report has been prepared and distributed by ASBL in the sole capacity of a Research Analyst (Reg No. INH000000206) of SEBI (Research Analyst) Regulations 2014. ASBL is a wholly owned subsidiary of Ashika Global Securities (P) Ltd., a RBI registered non-deposit taking NBFC Company. Ashika group (details is enumerated on our website www.ashikagroup.com) is an integrated financial service provider inter alia engaged in the business of Investment Banking, Corporate Lending, Commodity Broking, Debt Syndication & Other Advisory Services. There were no significant and material disciplinary actions against ASBL taken by any regulatory authority during last three years. Disclosure ASBL or its associates, its Research Analysts (including their relatives) may have financial interest in the subject company(ies). However, the said financial interest is not limited to having an open stock market position in /acting as advisor to /having a loan transaction with the subject company(ies) apart from registration as clients. 1) ASBL or its Research Analysts (including their relatives) do not have any actual / beneficial ownership of 1% or more of securities of the subject company(ies) at the end of the month immediately preceding the date of publication of this report or date of the public appearance. However ASBL's associates may have actual / beneficial ownership of 1% or more of securities of the subject company(ies). 2) ASBL or their Research Analysts (including their relatives) do not have any other material conflict of interest at the time of publication of this research report or date of the public appearance. However ASBL's associates might have an actual / potential conflict of interest (other than ownership). 3) ASBL or its associates may have received compensation for investment banking, merchant banking, and brokerage services and for other products and services from the subject companies during the preceding 12 months. However, ASBL or its associates or its Research analysts (forming part of Research Desk) have not received any compensation or other benefits from the subject companies or third parties in connection with the research report. Moreover, Research Analysts have not received any compensation from the companies mentioned herein in the past twelve months. 4) ASBL or their Research Analysts have not managed or co managed public offering of securities for the subject company(ies) in the past twelve months. However ASBL's associates may have managed or co managed public offering of securities for the subject company(ies) in the past twelve months. 5) Research Analysts have not served as an officer, director or employee of the companies mentioned in the report. 6) Neither ASBL nor its Research Analysts have been engaged in market making activity for the companies mentioned in the report. Disclaimer The research recommendation and information herein are solely for the personal information of the authorized recipient and does not construe to be an offer documents or any investment, legal or taxation advice or solicitation of any action based upon it. This report is not for public distribution or use by any person or entity, where such distribution, publication, availability or use would be contrary to law, regulation or subject to any registration or licensing requirement. We will not treat recipients as customer by virtue of their receiving this report. The report is based upon the information obtained from public sources that we consider reliable, but we do not guarantee its accuracy or completeness. ASBL shall not be in anyways responsible for any loss or damage that may arise to any such person from any inadvertent error in the information contained in this report. The recipients of this report should rely on their own investigations. 5