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We initiate coverage on SBI AMC with BUY and Jun-27E TP of Rs750, implying 31% upside from the IPO allotment price of Rs574, and valuing the stock at an FY28E PER of 39x. Our positive view rests on three pillars: 1) SBI’s brand and distribution, coupled with significant under-penetration of SBI MF within the SBI Bank channel (~5.5mn customers vs 21mn salary package accounts), position SBI AMC to benefit from India’s long-term mutual fund growth story, particularly in Bharat (B-30 towns and villages); 2) the sustained shift in asset mix toward higher-yielding assets such as Equity and Alternate Investments (AIF/PMS) is likely to support revenue yields; and 3) economies-of-scale-led operating leverage is expected to drive ~17% EBITDA CAGR over FY26-29E. As the savings and investment needs of Indians evolve, the middle class is increasingly embracing mutual funds as its core investment vehicle, and SBI AMC has all the ingredients to become “the asset manager to every Indian,” just as its parent has become “the banker to every Indian”

A play on brand, distribution, and under-penetration

Powered by SBI’s unparalleled brand and distribution reach, especially in Bharat (B-30 cities and rural India), and the under-penetration of MF among its customers, SBI AMC is among the best positioned to ride the structural, long-term growth story of MF investments in India. This strength is already on display, with SBI AMC having achieved market leadership across product segments. Despite impressive MF AUM growth over the past decade (10Y CAGR to Mar-26: 20%), with MF AUM at 31% of bank deposits (vs 216% for the US and 48% for the UK) and the share of MFs in HH savings at ~12%, MF investment remains a long-term structural growth story, backed by India’s economic growth and under-penetration. SBI has ~21mn salary accounts (with ~350mn savings accounts excluding PMJDY and BSBD), while unique SBI AMC investors in the SBI channel stand at just ~5.5mn indicating:

1) deep under-penetration among potential customers (~26% of salary accounts)

2) a long runway to penetrate the 350mn accounts as rising affluence shifts investment preference toward MFs and equities.

Multiple levers to ensure healthy AUM, revenue, and profitability growth

SBI AMC’s market leadership across segments and distinct leadership in B-30 markets, coupled with a strong brand, an extensive parent-led distribution, and improving performance, are likely to drive healthy AUM growth of ~17% over FY26-29E. While we expect yields to be broadly stable, revenue is expected to clock 16% CAGR, translating to ~17% EBITDA CAGR as margins expand to ~81% by FY29E.

Initiate at BUY with Jun-27E TP of Rs750

We initiate coverage on SBI AMC with BUY and Jun-27E TP of Rs750, implying 31% upside from the IPO allotment price and valuing the company at an FY28E PER of 39x. Our target multiple is broadly in line with large peers such as ICICIAMC and NAM. SBI’s brand, distribution, and under-penetration among SBI Bank customers present SBI AMC with a runway that supports higher growth over a longer period, hence commanding a premium valuation.

Key risks:

1) loss of counter share in SBI

2) sustained underperformance of schemes

3) prolonged bearish equity markets

4) regulatory shocks.

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