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Motilal Oswal Report
Motilal Oswal has initiated coverage on SBI Funds Management Ltd. with a Buy rating and has set a target price of Rs 720, based on FY28E core P/E of 42 times, implying a potential upside of 28% from the reports CMP of Rs 564.
According to domestic brokerage firm Motilal Oswal, SBI Funds Management is a high-quality, structurally compounding asset management franchise, supported by its market leadership, SBI-led distribution moat, underpenetrated MF industry, and significant operating leverage.
The brokerage expect 13% MF AUM FY26-28 CAGR, gradually improving yields, and a rising contribution from alternates to drive a 14% FY26-28 revenue CAGR. Supported by ~81% Ebitda margins and continued cost efficiency, PAT is expected to clock ~16% CAGR, translating into a 51-52% RoE.
The brokerage's valuation reflects SBI Funds superior franchise quality and profitability while remaining cognizant of key risks around market-linked AUM volatility, TER,regulatory changes, and pressure on active-equity yields.
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