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Capital market players, including asset management companies (AMCs) and RTAs, are likely to report stable performance during 1QFY27, in our view. While SIP flows sustained at ~Rs310bn during May-26 despite the volatile markets, the Nifty gained ~7% over 1QFY27, driving MTM gains. In this backdrop, we expect mutual fund (MF) AUM to grow ~3% sequentially, aided by MTM gains and steady SIP flows. We expect AUM growth and yield to be broadly stable, delivering a largely stable revenue growth. The Nifty movement over the quarter is likely to aid investment income for AMCs, driving increased profitability on a sequential basis. While we expect AMCs to see divergence in AUM growth, we estimate MF QAAUM across AMCs under our coverage to increase ~15% yoy and ~1% sequentially. NAM remains the fastest-growing AMC on a sequential basis, while HDFCAMC, ICICIAMC, and UTIAM are likely to report ~1% sequential growth in MF AUM. ABSLAMC is likely to report largely flat MF AUM growth. With the MF industry AUM expected to grow ~3% qoq, RTAs are likely to report stable MF-based revenue growth, while the non-MFbased businesses are likely to report healthy growth. We tweak our estimates marginally across our coverage and roll forward our TPs to Jun-27E. Despite volatile market conditions, we maintain a constructive view on the long-term structural growth prospects of the industry. Any near-term correction in stock prices should offer attractive accumulation opportunities.

AMCs expected to report stable performance

The mutual fund industry’s AUM is expected to grow ~3% sequentially, led by sustained SIP flows and MTM gains on account of ~7% movement in Nifty over 1QFY27. In this backdrop, we believe MF QAAUM across AMCs under our coverage is likely to grow ~15% yoy and ~1% sequentially. NAM has remained the fastest-growing AMC, clocking ~4% sequential growth in MF QAAUM, while ICICIAMC, HDFCAMC, and UTIAM are likely to report largely stable MF QAAUM, growing ~1% sequentially. ABSLAMC is likely to report flat MF QAAUM growth during the quarter. NAM is set to clock the fastest-growing equity AUM, at ~6% sequentially, while HDFC AMC and ICICI AMC are likely to deliver ~1% qoq growth in AUM. UTI AMC is expected to witness a slight sequential decline in equity AUM. Passive AUM is likely to have grown at a healthy pace for all players on a sequential basis. With yields remaining broadly stable, we expect the sequential growth in revenue to be largely stable, mirroring AUM growth. EBITDA margins across AMCs are likely to dip sequentially, but remain broadly stable yoy. The movement in Nifty over the quarter is likely to boost investment income across AMCs, thus driving increased profitability on a sequential basis.

Non-MF-based businesses expected to drive revenue growth for RTAs

With the mutual fund industry AUM expected to grow ~3% sequentially, and with MF revenue yields being broadly stable, we expect MF revenue growth to remain steady for RTAs. CAMS is expected to witness strong non-MF-based revenue growth YoY, on the back of a low base effect and growth across Payments, AIF, and Insurance businesses. KFINTECH is likely to report strong growth yoy in non-MF businesses, led by strong growth in International and AIF businesses and on account of consolidation of Ascent Fund Services (not included in the base). Issuer Solutions business performance is likely to remain soft, owing to volatile markets and low participation from retail investors

We maintain a positive view on long-term prospects of AMCs and RTAs

We have tweaked our FY27-29 estimates marginally across RTAs and AMCs and roll forward our target price to Jun-27E. We increase our Jun-27E TP of NAM and ABSLAMC to Rs1,350 and Rs1,250, respectively. We remain positive on the overall long-term structural growth prospects of the mutual fund industry, led by sustained SIP flows despite volatile markets and the under-penetration in the mutual fund industry. Any nearterm correction in stock prices would offer attractive entry points.

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