IGI Logo

Equity flows improve, while yield remains stable

Our view – Higher share of equity in AUM helps maintain revenue yield

Revenue Yield – Equity segment yield sequentially down but overall revenue yield has remained stable: The equity segment yield has come down QoQ from 68bps in 1Q to 67bps in 2Q. However, the total revenue yield has remained stable since negative factors have been offset by the rise in share of equity. The company has not undertaken any exercise yet like its peers for revision of commission rates for distributors, but they have stated that they will take suitable steps when appropriate.

Equity business - Equity business continues to improve with revival of flows in certain funds: The equity mutual funds average AUM was Rs. 1,806bn for 2Q up 39% YoY. The SIP flows for the quarter were Rs 42bn while the SIP AUM stood at Rs 839bn, up 38% YoY. Some of the equity schemes leading the revival of flows for the company are Frontline Equity, Flexicap and Multi Asset Allocation Fund.

We maintain ‘ADD’ rating on ABSL with a revised price target of Rs 900: We value ABSL at 26x FY26 P/E, at which the stock would trade at an FY26 P/B of 6.1x

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

* Revenue: Revenue from operations at Rs 4,242mn was up 9.7%/26.6% QoQ/YoY, leading/lagging QAAUM growth of 8.7%/23.3% QoQ/YoY.

* Share of Equity in AUM: Share of Equity in AUM (including Hybrid funds) at 47.1% was up 113bps QoQ and 524bps YoY (calculated on rounded off figures)

* Share of B-30 in AUM: Share of B-30 in AUM at 18.4% was up 70bps QoQ and 110bps 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 59.0%, was up 207bps QoQ and 175bps YoY

Please refer disclaimer at https://yesinvest.in/privacy_policy_disclaimers
SEBI Registration number is INZ000185632