Asset Management Companies : Oct-Dec’25 Earnings Preview by Prabhudas Lilladher Ltd
Good quarter owing to healthy equity growth
Equity QAAuM for the industry is likely to see a growth of 5% QoQ and 15.7% YoY in Q3FY26 due to net flows and MTM. Equity/debt mix in Nov’25 industry MAAuM was 54.4%/16.1%. Pace of equity flows slowed down marginally in Oct/Nov’25; excl. NFO net equity flows were Rs647bn (Rs1,259bn in Q2FY26). We expect coverage AMCs (ex-ICICIAMC) to see equity QAAuM growth of 4.9% QoQ/15.7% YoY. Equity QAAuM for HDFC/NAM could grow by 5.9%/5.2% QoQ and 18.3%/18.5% YoY respectively. Due to labor code impact, core PAT growth could be lower by 6.8% QoQ. Owing to run-up in equity markets from Oct-Dec’25, we slightly upgrade FY26E industry equity CLAuM. Hence for HDFCAM/NAM we raise core PAT by 4%/3% for FY26E and 4%/1% for FY27E.
* Equity QAAuM to rebound QoQ led by HDFC AMC and NAM: Coverage AMCs would see QAAuM increase of 5.1% QoQ and 17.7% YoY to Rs21.4trn; HDFC AMC/NAM could grow by 4.9%/6.8% QoQ. Equity QAAuM for HDFC/NAM could be up by 5.9%/5.2% to Rs5.7/3.2trn.
* Revenue yields may fall QoQ: Yields may fall due to yield impact due to telescopic pricing as equity QAAuM has increased QoQ. We see revenue for coverage AMCs to increase by 3.8% QoQ/12.9% YoY to Rs22.6bn.
* Opex to increase QoQ: Due to VRS scheme in place, UTIAMC is likely to see a spike in staff costs (+60.0% QoQ) as against NAM and HDFC. Excluding this, we expect opex to rise ~6% QoQ led by an increase in staff cost on account of the new labor code implementation
* Core profitability to decline QoQ: Rise in revenue would be offset by higher opex (mainly UTI). Hence core income yield could fall to 25.2bps from 27.3bps in Q2FY26. For HDFCAM/NAM/CRAMC core income yields could fall by 0.5- 0.6bp QoQ. Other income could see uptick due to higher MTM gains in equity.
* Slight downtick in core PAT yields: Tax rate for coverage AMCs is expected to inch up QoQ at 23.4%. Hence, core PAT yields might see a downtick to 19.3bps from 21.8bps in Q2FY26.
* ICICIAMC Q3FY26 preview: Equity QAAuM growth would be best in class at 7.3% QoQ to Rs6.1trn. Core income growth would be 5.0% QoQ to Rs10.45bn or 39bps of MF QAAuM. Our FY26 earnings could be upgraded due to opex.
* Change in target prices: Due to change in CLAuM estimates for industry, performance of AMCs and ICICIAMC listing, there is a fall in our TPs as follows:
* For HDFCAM we reduce multiple to 37.5x from 41x earlier and reduce TP to Rs2,950 from Rs3,087.5. Retain ‘BUY’.
* We maintain multiple and TP for NAM at 34x and Rs930. Retain BUY.
* For UTIAM, we trim multiple to 14x from at 16x and reduce TP to Rs1,250 from Rs1,400.
* We reduce multiple slightly for CRAMC to 24x and trim TP to Rs325.
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