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Equity net flows and revenue yield improve

Our view – With improved net flows, pace of market share loss declines

Revenue Yield – Overall revenue yield has improved but has an element of one-off benefit also: The calculated revenue yield for 3Q was at 46bps, up by 2bps QoQ and 3bps YoY. The key reason for the improvement in yield were 1) Increase in TER for certain debt schemes 2) Fall in AUM due to MTM impact, leading to higher TER 3) Realignment of marketing and distribution expenses. The Equity segment yield will normalize from the current 70-71bps to 67-68bps in 2 quarters (presumably 1QFY26) as the one-off benefit from realignment of marketing and distr. expense gets nullified.

Equity business - Equity net flows witnessed an improvement: ABSLAMC has witnessed an improvement in net flows in certain large-cap funds, muti asset allocation fund, thematic fund, etc. Overall, the company saw an improvement in net flows excluding NFOs and the pace of decline in market share has slowed down.

We maintain ‘ADD’ rating on ABSL with a revised price target of Rs 730: We value ABSL at 22x FY26 P/E, at which the stock would trade at an FY26 P/B of 4.9x.

(See Comprehensive con call takeaways on page 2 for significant incremental colour.)

Other Highlights (See “Our View” above for elaboration and insight)

* Revenue: Revenue from operations at Rs 4,451mn was up 4.9%/30.4% QoQ/YoY, leading QAAUM growth of 0.2%/23.2% QoQ/YoY.

* Share of Equity in AUM: Share of Equity in AUM (including Hybrid funds) at 46.8% was down -36bps QoQ but up 310bps YoY (calculated on rounded off figures)

* Share of B-30 in AUM: Share of B-30 in AUM at 18.5% was up 10bps QoQ and 100bps YoY.

* Channel mix: Share of MFDs, Banks, NDs and Direct was 33%, 8%, 17% and 42%, respectively in overall AUM (Ex-ETF)

*Operating profit margin: Operating profit margin for the quarter, at 61.6%, was up 260bps QoQ and 474bps YoY.

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