Add Aditya Birla Sun Life AMC Ltd For Target Rs. 435 - ICICI Securities Ltd
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We upgrade Aditya Birla Sun Life AMC (ABSL) on the back of improved earnings growth prospects driven by better fund performance, strong retail franchise and revision in TER regulation, which is now expected to be favourable (Link) vs earlier announcements. Our revised target price stands at INR 432 (INR 356 earlier) based on 15x (unchanged) FY25E core EPS of INR 22 (INR 17.4 earlier) and cash per share of INR 102. We factor-in 14.5% AAUM CAGR between FY23-FY25E and expect overall revenue yields to decline from 43.8bps in FY23 to 41.5bps in FY24E and 41bps in FY25E, leading to a revenue CAGR of 10.9% during the same period. This will result in EBITDA (ex-other income) of INR 8.9bn in FY25 (12.9% CAGR between FY23-25) and core PAT of INR 6.3bn in FY25 (12.4% CAGR between FY23-25)
Q1FY24 result highlights
ABSL revenue from operations increased 8% QoQ to INR 2,969mn. Total operating expenses grew marginally by 1.6% on QoQ basis. Employee expenses were up 16.4% QoQ (Q4 was a lower base) while other expenses declined 14.4% in Q1FY24. Core EBITDA increased 7.6% QoQ to INR 1,700mn. PAT rose 12% QoQ to INR 1,249mn due to sharp increase in ‘other income’ because of significant M2M gains.
ABSL fund performance
ABSL’s large-cap fund Aditya Birla Sun Life Frontline Equity Fund gave a 1- year return of 23.4% in Jun’23. Its performance rank for this period amongst 29 large-cap funds stood at 11 and improved 1 position from 12th in Mar’23 from Mar’23. ABSL’s flexicap fund Aditya Birla Sun Life Flexi Cap Fund gave a 1-year return of 24% in Jun’23. Its performance rank for this period amongst 29 large-cap funds stood at 19 and improved 6 positions from 25th in Mar’23from Mar’23. ABSL’s ELSS fund Aditya Birla Sun Life ELSS Tax Relief 96 Fund gave a 1-year return of 16% in Jun’23. Its performance rank for this period amongst 34 large-cap funds stood at 34 (declined from 31 in Mar’23). ABSL’s Multicap fund Aditya Birla Sun Life Multi-Cap Fund gave a 1-year return of 23.5% in Jun’23. Its performance rank for this period amongst 14 large cap funds stood at 12, down 4 positions from 8th from Mar’23.
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