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Large-cap rally a key to drive net equity flows

ICICIAM saw a decent quarter as core income was a 3.7% beat due to higher revenue led by better MF yield at 48bps (PLe 46bps) which was attributable to net equity flows shifting to smaller equity schemes from flagship ones. Market share in net equity flows declined in 5MFY27 to ~11% from ~19% in FY26 due to lower presence in SMID/flexicap categories which are witnessing strong flows at an industry level. Hence equity market share declined by 29bps QoQ to 13.8%. PMS/AIF businesses remain a silver lining as healthy growth trajectory is intact. Due to weak equity returns, mid/small players are grabbing market share in net equity flows causing industry fragmentation. Hence, we trim multiple to 38x from 40x while we roll forward to Sep’28 core EPS and trim TP to INR 3,420 from INR 3,550. Retain ‘BUY’.

Decent quarter with core PAT beat led by better MF revenue:

Equity QAAuM (incl. bal) was INR 6.62trn that grew by 4.4% QoQ. Revenue was 3.4% more at INR 15.4bn (PLe INR 14.9bn) led by higher MF yield at ~48bps (PLe 46bps). Non-MF revenue was 3.7% lower. Employee cost was in-line at INR 2.13bn; other opex was INR 1.47bn (PLe INR 1.41bn). Core income was a 3.7% beat at INR 11.8bn (PLe INR 11.4bn) resulting in operating yields at 38.2bps (PLe 36.8bps). Other income was lower at INR 169mn (PLe INR 500mn) due to MTM affecting equity and debt. Tax rate was 25.8% (PLe 25%). Core PAT was 2.6% beat at INR 8.76bn (PLe INR 8.54bn). Core PAT yields came in at 28.3bps (PLe 27.6bps).

MF yield surprises positively:

Share of equity (incl. balanced) was up slightly by 40bps QoQ to 57.3% while that of debt declined by 103bps to 15.4% and liquid rose by 40bps to 6.9%; ETF share was 16bps up to 13.1%. Intuitively, MF yield should have been stable or slightly fallen due to increase in equity QAAuM, however, MF yield was up 1.5bps QoQ to 47.9bps and the management attributed the same to net equity flows shifting from greater size schemes (low-yield) to lower size ones (higher-yield). Net equity market share has declined from ~19% in FY26 to 11.3% in 5MFY27 owing to weak relative performance and lesser presence in SMID/flexicap categories (strong industry flows). Hence the company lost equity market share by 29bps to 13.8%.

SIP flows declined; NFOs and alternate business on track:

SIP/STP flows declined from Jun’26 by 4.1% to INR 46.7bn in Sep’26, due to shift towards SMID categories. Company remains cautious on SMID due to the recent up-move and is waiting for better valuation to push sales. PMS+AIF QAAUM saw another strong quarter; its combined QAAuM growing by 6.4% QoQ to INR551bn, while the acquisition of I-Sec’ PMS business may expand its customer base. Advisory business continues to see outflows, its QAAuM falling by 6.5% QoQ to INR259bn due to FII outflows.

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SEBI Registration number is INH000000933.