Target: ₹710
CMP: ₹577.40
SBI FM, the largest Indian AMC, has ₹12.5 lakh crore of mutual fund assets. Key differentiations are: exclusive association with the largest PSU bank; market leadership in faster-growing lower-tier markets; well-diversified scheme mix; and institutional scale.
SBI accounts for 35 per cent of SBI FM’s equity AUM. We see the parent bank offering three advantages to SBI FM: expansion opportunity noting average MF AUM per SBI branch is only 10 per cent of retail deposits; the cost of distribution is lower; affinity of SBI customers for SBI FM’s schemes could reduce performance-related risks to growth.
SBI FM’s scheme performance has been improving with two-five schemes within top tiers in CY25/26 vs one in CY24. We expect MF AAUM to grow 13 per cent between FY26-29e. This, along with stable yields, translates to 14 per cent revenue CAGR till FY29e.
We expect operating profit to grow at 15 per cent CAGR till FY29e led by operating leverage. SBI FM’s scale allows it to operate at a lower opex ratio as compared to peers. However, PAT growth will be slower at 13 per cent CAGR as investment assets fell 30 per cent year on year in FY26 due to a one-time interim special dividend of ₹3,560 crore.
SBI FM is trading at 37x September 2027e OPAT, a 5 per cent discount to HDFC AMC and 10-20 per cent discount to ICICI AMC/NAM. Our TP of ₹710 is based on 40x September 2028e OPAT, in-line with HDFC AMC’s multiple, considering similar earnings growth profile.