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Net equity flow market share a key to re-rating

ABSLAMC saw a good quarter as core income was 3.4% higher due to better revenue yield at 43.1bps which increased by 0.5bps QoQ. Positive yield movement QoQ was largely driven by a favorable asset mix change, with equity share increasing by 78bps QoQ to 41%. Superior 1-year equity performance has started reflecting in 3-year bucket and which has resulted in net equity flow market share improving to 1.2% for H1FY27 from 0.3% for FY26. AMC’s flow share in flagship schemes remains higher than its stock market share. Growth momentum in alternate business continues as share of non-MF revenue inched up slightly QoQ. Execution of strategies to increase direct share in equity distribution mix remains key monitorable. We maintain multiple at 27.5x on Sep’28 core EPS with TP at INR1,200. Retain ‘BUY’.

Good quarter; core income beat aided by better MF yield:

Equity QAAuM (incl. bal) came in as expected at INR1.79trn (+5.3% QoQ). Revenue was 2.7% higher at INR4.8bn (PLe INR4.6bn) led by better yield at 43.1bps (PLe 42bps). Opex was INR2.19bn (PLe INR2.15bn). Staff cost was higher at INR1.21bn (PLe INR1.15bn) and other opex was slightly lower at INR1bn. Hence, core income was 3.4% ahead of PLe at INR2.6bn (PLe INR2.5bn) resulting in operating yield of 23.3bps (PLe 22.5bps). Other income was lower at INR0.4bn (PLe INR0.5bn). Tax rate was in-line at 25% in Q2'27. Hence, core PAT was 3.4% above PLe at INR1.93bn, core PAT yield was 17.4bps (PLe 16.9bps).

Flow momentum sustained by performance & distribution:

MF yield increased by 0.5bps QoQ largely driven by asset mix change; share of equity segment increased by 78bps QoQ to 40.5%. Equity fund performance in 1-year bucket is consistently improving, which has started reflecting in 3-year bucket too. Hence net flow market share in equity has increased from 0.3% in FY26 to 1.2% in H1FY27. AMC’s flow market share in flagship schemes (flexicap, multi-asset, small-cap, etc.) at ~4.8% is higher than stock market share of 3.5%. Monthly SIP flows at INR10.9bn was steady QoQ. Retention rate has improved from 4-5% to ~25–30%. AMC is expanding presence across platforms.

Alternate business expansion continues:

Expenses are expected to remain at Q2FY27 levels adjusted for inflation while ESOP costs for FY27/28 are guided at 700-750mn. EPFO/ESIC mandates could enhance AMC’s credibility to attract private/PSU/offshore mandates. Fund raising is underway in real estate and offshore categories, while launch of 6 gift city funds are under consideration.

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