ICICI Securities
Aditya Birla AMC (Buy)
Target: ₹728
CMP: ₹540.1
Aditya Birla Sun Life AMC remains one of the top asset managers of India with a well-entrenched franchise, as evident from its about ₹3 lakh crore AUM, over 67,000 distributors and presence in 280+ locations across India. Overall AUM/equity AUM share of 7.8 per cent/6.6 per cent and retail AUM share of 6.8 per cent (based on Nov’21 AMFI data) underpin the company’s strong track record. Business strength is complemented by ₹11,700 crore worth of alternate assets (Sep’21) and diversified distribution across 100+ banks, 240+ national distributors and 70+ digital fintech partnerships. Retail folios clocked 17.4 per cent CAGR between Sep’16 and Sep’21.
We initiate coverage with Buy rating and target price of ₹728 based on 30x FY23/24 core EPS (excluding impact of other income) of ₹19.2/22 and cash of ₹80/92 a share. We ascribe 25:75 weightages to FY23/24 estimates.
Key risks : Lower AUM growth due to macroeconomic events like lower GDP growth, lower rate of savings; Company-specific events or prolonged underperformance could have a direct impact on earnings, thus profitability. Other risks to revenue include decline in TER rates specified by regulators and increase in passive flows, which can lower revenue yields.