Buy ICICI Pru AMC Ltd for the Target 4,000 by Emkay Global Financial Services Ltd
ICICIAMC delivered a stable quarter, with MF QAAUM at Rs11.1trn, increasing ~1% qoq, and overall MF QAAUM market share at 13.4%. While yields were broadly stable, revenue at Rs15.6bn grew ~1% (Emkay estimate: Rs15.5bn) sequentially, mirroring the AUM growth. EBITDA margin at 72.4% dipped sequentially, as the base quarter benefited from lower employee cost. PAT at Rs9.6bn rose 26% qoq, driven by strong other income on the back of MTM gains during the quarter and came in above our estimate of ~Rs9bn. The management indicated no negative impact from the TER regulation changes. While equity AUM benefited from MTM gains during the quarter, debt AUM saw corporate redemptions amid tight liquidity. Baking in the 1Q developments, we tweak our estimates, raising revenue by ~1% while cutting EBITDA by ~1% on higher employee costs, leading to ~1% cut in PAT over FY27-29E. We maintain BUY and Jun-27E TP of Rs4,000 implying ~44x FY28E PE.
Revenue growth mirrors AUM growth
ICICIAMC delivered a stable quarter, with its MF QAAUM increasing ~1% qoq to Rs11.1trn and overall QAAUM growing to Rs11.97trn in 1QFY27. With yields broadly stable at ~56bps, revenue at Rs15.6bn grew ~1% qoq and was ~2% higher than our estimates, largely driven by higher yields. Employee costs at Rs2bn increased 11% yoy and 45% qoq on a low base in 4QFY26 (owing to reversal of ESOP costs in 4Q). As a result, EBITDA margin at 72.4% dipped 330bps qoq but increased 130bps yoy but was lower than our estimate of 73.3%. Other income at Rs1.8bn was higher than our estimate of Rs1.1bn, driving PAT at Rs9.6bn (+26% qoq) and was ~5%/~7% higher than our/consensus estimate. The company restated its financials for FY26 to reflect the acquisition of investment rights of certain AIFs from ICICI ventures.
Multiple products in pipeline; SIP trends in line with the industry
The company plans to launch multiple products across categories, creating a bouquet of products for future. The focus remains on creating a track record, which once completed would drive further sales. On the MF side, the company plans to launch Life Cycle Funds and Contra Funds, while SIF has multiple products in the pipeline approved by the regulator. Under alternates, ICICIAMC plans to launch Commercial Real Estate Funds. While SIP monthly flow at Rs48.72bn in Jun-26 was lower than Mar-26, the management noted that Jun-26 flows rebounded vs May-26, and quarterly SIP flows for 1QFY27 were in line with industry trends. The management highlighted that the company added 7 of every 10 new customers in the industry, taking total unique customers to 17.3mn.
We maintain BUY and Jun-27E TP of Rs4,000
To reflect the 1Q developments, we tweak our estimates, raising revenue by ~1% while cutting EBITDA by ~1% on higher employee costs, resulting in ~1% cut in PAT over FY27-29E. Given its strong brand, distribution, and healthy investment performance, ICICIAMC is poised to drive healthy AUM growth with profitability. We maintain BUY and Jun-27E TP of Rs4,000, implying FY28E PE of 44x.
For More Emkay Global Financial Services Ltd Disclaimer http://www.emkayglobal.com/Uploads/disclaimer.pdf & SEBI Registration number is INH000000354
