Over FY26-29E, PL Capital expects Aditya Birla Sun Life AMC to clock 15%/13% CAGR in equity/overall AAuM compared to 16.6%/14% for the industry, which would translate into revenue/opex/core income CAGR of 13%/12%/14%.
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PL Capital Report
Domestic brokerage firm PL Capital has initiated coverage on Aditya Birla Sun Life AMC Ltd. with a ‘Buy', rating valuing the stock at 27.5 times on Sep'28 core earnings per share to arrive at target price of Rs 1,200.
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The brokerage remains optimistic about its business prospects given the-
- improving equity performance, which is driving up net equity flow market share (1.2% FY27TD, 0.3% in FY26),
- superior equity/debt/liquid yield at 70/25/14bps due to lower distributor payouts; and
- focus on increasing non-MF revenue (3.1% in FY26), which has seen a healthy 24% CAGR over FY22-26.
PL Capital expects equity AAuM growth of ~18% over FY27-29E that may translate to core earnings CAGR of ~20% (highest among listed peers).
The stock is trading at 24/20x on Sep'28 core EPS (15% discount to HDFC AMC & 38%/35% discount to ICICI AMC/Nippon Life.
Key Risks
- Market volatility: Elevated market volatility may weigh on investor sentiment, potentially impacting equity inflows and overall AuM growth.
- Intense competition: Better equity performance and net flows of smaller players could lead to potential loss of market share.
- Performance risk: Underperformance in key schemes, particularly within the equity segment, may adversely affect investor retention.
- Regulatory risk: Any adverse regulatory changes, especially around TER cap, commission structure, etc., could impact profitability across AMCs.
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