ICICI Prudential Asset Management Company reported better-than-expected results for the September quarter of FY27, supported by improved revenue yields and growth in assets under management. However, while Jefferies raised its target price on the stock and maintained a ‘Buy' rating, Kotak Institutional Equities retained its ‘Reduce' recommendation, citing expensive valuations.
ICICI Prudential AMC reported a 6.08% year-on-year (YoY) increase in net profit to Rs 888.96 crore for Q2FY27. Revenue from operations grew 16.31% YoY to Rs 1,673.79 crore.
The company also approved its highest-ever interim dividend of Rs 30 per share, with October 21, 2026, fixed as the record date for determining eligible shareholders.
Jefferies Raises Target Price To Rs 3,760
Jefferies maintained its Buy rating on ICICI Prudential AMC and raised its target price to Rs 3,760 from Rs 3,600, following the better-than-expected September quarter performance.
The brokerage said operating profit after tax (OPAT) stood at Rs 1,190 crore, increasing 16% YoY and 7% quarter-on-quarter (QoQ). The figure exceeded its estimates by 3%, primarily due to improved revenue yields. Net profit was also 6% above its estimates, supported by higher other income.
Revenue yields improved by approximately one basis point sequentially, driven by a favourable mix of equity and alternative investment products.
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Jefferies highlighted accelerating growth in mutual fund assets, with quarterly average assets under management (QAAUM) increasing 3.9% QoQ in September, compared with 1.1% in the June quarter.
However, systematic transfer plan (STP) flows declined approximately 4% sequentially to Rs 4,700 crore, while redemptions weighed on net flows.
The brokerage raised its FY27-FY29 earnings estimates by 1-2%, citing improved yields and the company's expanding alternatives business.
Kotak Retains Reduce Rating
Kotak Institutional Equities maintained its Reduce rating on the stock and cut the target price to Rs 3,200 from Rs 3,250 earlier.
The brokerage acknowledged the company's healthy operating performance, improved revenue yields and growing alternatives platform. Higher-fee portfolio management services (PMS) and alternative investment funds (AIFs) contributed approximately 10% of net revenue.
However, Kotak flagged declining monthly systematic investment plan (SIP) inflows for the second consecutive quarter, reflecting broader industry trends and STP-related redemptions.
It also highlighted mark-to-market losses on equity and debt portfolios as a concern.
Kotak expects operating profit to grow at a compound annual growth rate of around 16% over FY27-FY29. Nevertheless, it believes the stock's rich valuation limits further upside potential.
While both brokerages acknowledged ICICI Prudential AMC's strong franchise and long-term growth prospects, their differing recommendations reflect contrasting views on the valuation investors are paying for that growth.
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