Add Aditya Birla Sun Life AMC Ltd For Target Rs.800 By Yes Securities
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Our view – SIP flows drive equity business, equity yield remains stable
Equity business - Equity business continues to improve even as management aspires for further improvement: The lump sum inflows into the recent NFO have been good. While lump sum flows are improving, SIPs have been the key driver of flows. The SIP flows for the quarter were Rs 37bn while the SIP AUM stood at Rs 770bn. Overall, a large component of the flows have gone into the thematic funds. Fund flows are improving outside thematic funds as well but the company is not yet satisfied with these flows
Revenue Yield – Overall revenue yield has remained stable sequentially and so has equity segment yield: Overall revenue yield has remained stable sequentially at 44 bps. Notably, equity segment yield has remained stable sequentially on a standalone basis at 68 bps. While the company does not intend to pay too much distributor commission, it will also not completely rationalize commission and will follow the middle path.
We maintain ‘ADD’ rating on ABSL with a revised price target of Rs 800: We value ABSL at 24.0x FY26 P/E, at which the stock would trade at an FY26 P/B of 5.4x
Other Aspects (See “Our View” above for elaboration and insight)
* Revenue: Revenue from operations at Rs 3,866mn was up 5.8%/24.3% QoQ/YoY, lagging/leading QAAUM growth of 6.3%/18.7% QoQ/YoY.
* Share of Equity in AUM: Share of Equity in AUM (including Hybrid funds) at 46.0% was up 16bps QoQ and 604bps YoY (calculated on rounded off figures)
* Share of B-30 in AUM: Share of B-30 in AUM at 17.7% was up 20bps QoQ and 170bps YoY
* Channel mix: Share of MFDs, Banks, NDs and Direct was 33%, 8%, 16% and 43%, respectively in overall AUM (Ex-ETF)
* Operating profit margin: Operating profit margin for the quarter, at 57.0%, was up 235bps QoQ and 93bps YoY
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