ICICI Pru AMC gains from higher yields as AUM growth stays steady
ICICI Prudential Asset Management Company Ltd.
BUY
₹2,969
₹2,895.6
₹3,800
27.99%
Investment View and Valuation
Emkay Research’s October 13, 2026 result update on ICICI Pru AMC retains its BUY view following a steady 2QFY27, as improved mutual fund and alternate-asset yields supported revenue growth. The broker believes ICICI Pru AMC’s strong brand and distribution network position it to deliver profitable AUM growth.
Emkay maintains its September 2027 target price of Rs 3,800, implying a FY28E P/E of about 43 times.
2QFY27 Financial Performance
ICICI Pru AMC reported mutual fund quarterly average AUM of Rs 11.6 trillion in 2QFY27, up about 4 per cent quarter on quarter and 14 per cent year on year. The company retained the second-highest industry market share at 13.3 per cent. Revenue yield improved to 57.5 basis points from 56.3 basis points in 1QFY27, reflecting improvement in both mutual fund and alternate yields.
| Metric | 2QFY27 | YoY change | QoQ change |
|---|---|---|---|
| Revenue from operations | Rs 1,674 crore | 16% | 7% |
| Reported EBITDA | Rs 1,215 crore | 16% | 7% |
| EBITDA margin | 72.6% | — | Up 20 bps |
| PAT | Rs 889 crore | 6% | Down 8% |
| Core PAT | Rs 876 crore | — | Up 6% |
Revenue from operations was around 3 per cent above Emkay’s estimate. Reported EBITDA margin was modestly above Emkay’s 72.4 per cent estimate. PAT exceeded Emkay’s estimate by 4 per cent, despite declining quarter on quarter as other income fell to Rs 16.9 crore from Rs 180.8 crore in 1QFY27 amid negative mark-to-market movements.
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Management Commentary and Growth Priorities
Management said redemptions were under pressure in certain schemes, including hybrid schemes, amid market volatility, although gross sales remained broadly steady.
Management acknowledged that ICICI Pru AMC has not built a large franchise in mid-cap and small-cap funds because of its conservative positioning and relatively high hybrid-fund exposure. Building these categories is expected to be a five to seven-year effort.
- The company is currently promoting large-cap funds based on a better risk-reward proposition.
- It has opened the small-cap category and plans to enter the mid-cap segment gradually at an appropriate time.
- In alternatives, management views pre-leased office yield funds within real estate funds as consistent with its risk framework and plans to scale this category.
Estimates and DCF Valuation
After incorporating the quarter, Emkay raised FY27E to FY29E operating-revenue estimates by around 1 per cent but made only marginal changes to earnings.
| Estimate | FY27E | FY28E | FY29E |
|---|---|---|---|
| PAT | Rs 3,761 crore | Rs 4,355 crore | Rs 4,992 crore |
| EBITDA margin | 72.2% | 72.2% | 72.4% |
Emkay’s DCF valuation uses a 12 per cent cost of equity and a 5 per cent terminal growth rate. This produces a March 2027 fair value of Rs 3,599 per share and a September 2027 target price of Rs 3,800.
Key Risks
- Market-volatility-led redemptions.
- Lower investment income from mark-to-market movements.
- The time required to build meaningful mid-cap and small-cap franchises.
Disclaimer: This is a summary of a research report published by the broker/research house identified above. The views, recommendations, target prices and estimates are those of the respective broker and do not represent DSIJ investment advice. The summary may be AI-assisted, hence please refer to the original report for complete details, disclosures and risks.
