September 2024 Results Preview | Sector: Capital Markets & Insurance
Financials – Non Lending
Result Preview
Growth saga of capital markets-linked companies continues
GI players to report modest growth; VNB margins to expand
Company
Angel One
BSE
CAMS
ICICI Lombard
360ONE WAM
MCX
Star Health
HDFC Life
IPRU Life
SBI Life
Max Financials
Equity indices continued to scale new heights in 2QFY25, with Nifty surpassing 26,000
and Sensex exceeding 85,000. The positive market sentiment and higher trading days
contributed to a sustained upward trajectory in key parameters (volumes, orders,
client additions, etc.) for capital markets-related companies. Angel One and BSE
continue to benefit from the current trends. However, SEBI’s new F&O segment
regulations are expected to impact these trends from the end of 3QFY25.
In the AMC sector, Jul’24 recorded the highest-ever net equity inflows. Equity AUM
rose 59% YoY in Aug’24, driven by an all-time high trajectory of SIP flows (~INR235b in
Aug’24). Growth across all segments, especially equity and money market AUM, led to
20% growth in the total MF AUM (over Mar’24-Aug’24). The strong growth
momentum in equity AUM is expected to boost the performance of CAMS and
360ONE.
Private life insurance companies posted 18%/9% growth in APE in Jul’24/Aug’24. For
Sep’24, we expect industry growth to remain stable. In VNB margins, we expect steady
or improving trends QoQ on account of the rising share of protection and annuity in
the mix along with scale benefits.
Excluding crop, the general insurance sector witnessed single-digit GWP growth of 6%
in Jul’24 and Aug’24. Growth in the health segment was tepid at 2%/10% YoY in
Jul’24/Aug’24. Further, the motor segment experienced a modest growth of 10%/6%
YoY in Jul’24/Aug’24. NATCAT claims during the quarter are expected to keep the loss
ratios elevated. We expect STARHEAL and ICICIGI to report improvement in
profitability on account of operational efficiency.
We remain positive on the long-term growth potential of non-lending financials, given
their broader themes of financialization and digitization of savings. Our top picks in
this space are ANGELONE, SBILIFE, and STARHEAL. While we maintain a positive view
on the capital market sector, the impact of F&O regulations will keep stock
performances in check in the short term.
4m+ demat additions MoM; cash ADTO declines from peak and F&O
volumes continue to inch up
Cash ADTO has witnessed a declining MoM trajectory during the quarter with a
decline of 9%/10%/4% MoM in Jul’24/Aug’24/Sep’24. While futures volumes
declined from Jul’24 levels, options experienced growth during the second half
of 2QFY25, resulting in F&O ADTO growth of -0.1%/1%/7% in
Jul’24/Aug’24/Sep’24.
BSE’s market share in the options segment continues to scale up, reaching
27%/13.3% in notional/premium turnover vs. 22%/8.7% in Jun’24.
Incremental demat account additions have been above 4m throughout the
quarter, recording 4.2m in Jul’24, 4.5m in Aug’24, and 4.2m in Sep’24 (average
3.3m per month in 1QFY25).
MCX has maintained strong growth momentum, especially in options volumes,
during 2QFY25. Futures ADTO increased from INR259b in 1QFY25 to INR270b in
2QFY25 (up 4% QoQ). Options ADTO increased from INR1.47t in 1QFY25 to
INR1.94t in 2QFY25 (up 32% QoQ).
Research Analyst - Prayesh Jain
(Prayesh.Jain@MotilalOswal.com)
Research Analyst - Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com) |
Muskan Chopra
(Muskan.Chopra@MotilalOswal.com)
October 2020
are advised to refer through important disclosures made at the last page of the Research
Investors
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