AMCs - Incremental AUM Growth To Decide Incremental Movement In Valuation Multiples: ICICI Securities

ICICI Securities Report

Asset management companies are likely to report lower QoQ end-to-end equity AUM growth (~7–10%) in Q2 FY25E versus Q1 FY25 (~10–18%), but could report higher QoQ equity AAUM growth (~10–15%) in Q2 FY25E versus Q1 FY25 (~7–13%).

Operational pointers such as monthly SIP flows/ accounts (August 2024: Rs 235 billion SIP flows/96 million SIP accounts) and MF folio/unique investors (Aug-24: 205 million MF folios /June-24: 46.9 million unique investors) remain strong.

Further, AUM based plays are relatively less prone to regulatory overhang beyond a possible TER cut.

As such, multiples could remain elevated for this segment in the near term. That said, incremental AUM growth will likely decide the multiples. Basis our scenario estimates, if monthly AUM growth ranges between ~1–2% (FY25–to-date: average 3.6%), current prices posit 34–40 times core price to earnings for HDFC AMC, 27–32x for Nippon AMC, 19–23x for Aditya Birla Sun Life AMC and 18–21 times for UTI AMC.

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