Buy ICICI Prudential Asset Management Company Ltd For Target Rs.3,550 by Prabhudas Liladhar Capital Ltd
1-yr equity performance a key monitorable
ICICIAM saw a decent quarter as revenue at INR 14.4bn was 3.3% higher as MF yield was a bit higher to PLe. As per company, TER change did not have any negative impact, indicating pass thru to distributors. We have factored a 2bps decline in equity yields over FY26-28E. Opex was more due to staff cost, driven by normalization and ESOP charge; quarterly run-rate is guided to be INR 2bn (incl ESOP). We had factored similar estimates earlier and hence do not change opex for FY27/28E. 3-yr equity performance remains one of the best, while net equity flow share in May’26 & Jun’26 remains above stock market share of 14%. We maintain multiple at 40x on Mar’28 core EPS and keep TP unchanged at INR 3,550. Retain ‘BUY’.
Decent quarter; better revenue offset by higher staff cost: Equity QAAuM (incl. bal) was INR 6.34trn that grew by 1.6% QoQ. Revenue was 3.3% more at INR 14.4bn (PLe INR 13.95bn) as MF fees was 1.6% higher. Staff cost soared to INR 2bn from INR 1.4bn in Q4FY26, partly driven by ESOP amortization, while other expenses fell 8.7% QoQ to INR 1.37bn. Core income was 1.9% lower at INR 11bn (PLe INR 11.2bn) resulting in operating yields at 36.8bps (PLe 37.8bps). Other income was ahead at INR 1.8bn (PLe INR 1bn) due to MTM gains in the treasury book. Tax rate was 24.7% (PLe 24%) in Q1'27. Core PAT was a 2.7% miss at INR 8.3bn. PAT was 4% ahead of PLe at INR 9.6bn led by higher other income
TER impact absorbed by distributors; temporary market share pressure: MF yield improved by 0.4bps QoQ as share of equity rose by 42bps QoQ to 56.9%. while that of debt fell 135bps QoQ due to corporate redemptions amid liquidity tightness led by USIran war. Liquid/ETF share was up by 38/39bps QoQ to 6.5%/13%. Company affirmed that there was no negative impact of TER changes, indicating pass thru to distributors. Equity performance in 3-yr bucket remains one of the best-in-class, while that in 1-yr bucket has slightly moderated in Q1FY27. However, market share in net equity flows remained higher than stock in May’26 & Jun’26.
ICICI venture funds to cushion profits; ESOP scheme announced: Staff cost rose to INR 2bn from INR 1.4bn in Q4FY26, driven by ESOP amortization; management expects the quarterly run-rate of INR 2bn to be sustainable. SIP flows moderated to INR 48.7bn in June 2026 from INR 51bn in March 2026, primarily due to higher SIP stoppages in older cohorts. SIF QAAUM stood at INR 26.8 bn, supported by launch of iSIF Active Asset Allocator and iSIF Equity Long Short during Q1’27
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