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ICICI Securities Report
We upgrade Aditya Birla Sun Life AMC Ltd. on the back of improved earnings growth prospects driven by better fund performance, strong retail franchise and revision in TER regulation, which is now expected to be favorable versus earlier announcements.
Our revised target price stands at Rs 432 (Rs 356 earlier) based on 15 times (unchanged) FY25E core earnings per share of Rs 22 (Rs 17.4 earlier) and cash per share of Rs 102.
We factor-in 14.5% average assets under management compound annual growth rate between FY23-FY25E and expect overall revenue yields to decline from 43.8 basis points in FY23 to 41.5 bps in FY24E and 41 bps in FY25E, leading to a revenue CAGR of 10.9% during the same period.
This will result in Ebitda (excluding other income) of Rs 8.9 billion in FY25 (12.9% CAGR between FY23-25) and core profit after tax of Rs 6.3 billion in FY25 (12.4% CAGR between FY23-25).
Q1 FY24 result highlights
Aditya Birla Sun Life AMC's revenue from operations increased 8% QoQ to Rs 2,969 million. Total operating expenses grew marginally by 1.6% on QoQ basis.
Employee expenses were up 16.4% QoQ (Q4 was a lower base) while other expenses declined 14.4% in Q1 FY24. Core Ebitda increased 7.6% QoQ to Rs 1,700 million.
Profit after tax rose 12% QoQ to Rs 1,249 million due to sharp increase in ‘other income' because of significant mark-to-market gains.
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