Brokerages largely remained constructive on ICICI Prudential Asset Management Co. after its June-quarter FY27 earnings, with Jefferies, Morgan Stanley and Bernstein reiterating their positive stance on the stock despite the company missing some estimates as higher employee costs and lower non-core income weighed on profitability.
Analysts said the earnings miss was largely driven by higher investments in people rather than a deterioration in the core business. They pointed to resilient mutual fund inflows, steady growth in assets under management (AUM) and the company's diversified revenue streams as reasons to remain positive on the long-term outlook.
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Jefferies retained its bullish view, citing the strength of ICICI Prudential AMC's alternatives business and diversified revenue mix. Bernstein highlighted healthy operating growth supported by treasury gains, while Morgan Stanley said the franchise remains attractive but believes the current valuation leaves limited room for further upside.
Here's What Brokerages Said After The Results:
Jefferies
- Maintained Buy with a target price of Rs 3,770.
- Said operating profit missed estimates due to lower revenues and higher employee costs.
- Added that net profit also fell short of expectations because of lower other income.
- Cut FY28 and FY29 EPS estimates by 3-4% to factor in higher employee costs.
- Continues to like the company for its diversified business model and faster-growing alternatives business.
Morgan Stanley
- Maintained Equal-weight and cut the target price to Rs 3,320 from Rs 3,410.
- Said operating profit was 1% below estimates as employee costs came in higher than expected.
- Noted that mutual fund inflows have remained resilient.
- Raised FY27 estimates following the market recovery but trimmed FY28 forecasts.
- Likes the franchise but believes the stock's valuation is full.
Bernstein
- Reiterated Outperform with a target price of Rs 3,510.
- Said the company delivered healthy operating growth during the quarter, supported by treasury gains.
- Added that healthy equity markets during Q1 drove growth in mutual fund assets under management and boosted treasury income.
ICICI Prudential AMC Q1 Highlights
ICICI Prudential Asset Management reported a 25.5% year-on-year (YoY) increase in net profit to Rs 965 crore for the June quarter, while total income rose 20.2% to Rs 1,745 crore.
Revenue from operations increased 17.6% year-on-year to Rs 1,564 crore, while operating profit rose 20% to Rs 1,100 crore.
The company's quarterly average assets under management (QAAUM) climbed 18.3% from a year ago to Rs 11.17 lakh crore, while active mutual fund QAAUM rose 15.1% to Rs 9.25 lakh crore. Equity and equity-oriented QAAUM stood at Rs 6.31 lakh crore, giving the fund house a 14% market share in the segment.
Monthly systematic transactions increased to Rs 4,872 crore in June from Rs 4,245 crore a year earlier, reflecting continued investor participation through SIPs. The company retained the second-largest market share of 13.4% in total mutual fund QAAUM and the largest market share of 13.5% in active mutual fund QAAUM at the end of the quarter.
Its customer base expanded 15.1% year-on-year to 1.73 crore. On the cost front, total expenses rose to Rs 464 crore from Rs 416 crore a year earlier, while employee benefit expenses increased 11% to Rs 204 crore, a key factor flagged by brokerages for the earnings miss.
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ICICI Prudential AMC, established in 1993, is among the leading Indian AMC with more than 30 years in the industry. It manages mutual funds, PMS, AIFs, and provides offshore advisory. With 3,813 employees and 286 offices, it serves 17.3 million customers with a focus on risk management and long-term wealth creation.
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