Shares of asset management companies (AMCs) are witnessing a strong buying action, helped by the firm trend in the Indian stock market and resilient and growing SIP inflows. Against this backdrop, shares of Motilal Oswal Financial Services, HDFC Asset Management Company, Nippon Life India, UTI AMC and Aditya Birla Sun Life have rallied up to 50% in three months, in line with the sharp rebound seen in the Indian stock market from April lows.
From its April lows of nearly 22,000 level, Nifty 50 has jumped almost 14% as of yesterday, defying various headwinds like the global tariff war, geopolitical risks and the possibility of an economic slowdown. The retail investor confidence also remains resilient, as highlighted by steady flows into mutual funds.
SIP gross flows increased to a record high of ₹27,300 crore in June 2025, with the number of discontinued SIPs (at 4.8 million) remaining much lower than the new SIPs (6.2 million) registered for the second consecutive month. The ratio of discontinued SIP registrations to new SIP registrations was below the 100% mark for the second consecutive month after remaining above 100% for four consecutive months between January to April 2025, signalling a revival in investor sentiment.
Possible benefits from higher consumer discretionary income are also visible in the higher inflows into MFs. Tax cuts announced by the government in the Union Budget 2025-26 and repo rate cuts by the Reserve Bank of India are aiding the increased income for Indian investors, finding their way into the stock market.
Increased trend of commission rationalisations, possible higher growth from a new asset class of MFs such as specialised investment funds and lower regulatory risk are behind other factors mobilising investors to pick AMC stocks to ride the wave of strong sentiment in the Indian stock market.
Earnings expectations for AMCs
Against this backdrop, brokerage Kotak Institutional Equities has revised the FY2025-28 earnings estimates upwards by 4-9%, primarily led by higher MTM assumptions compared to estimates at the start of FY2026 (10-12% versus 5%).
“Broader markets are up ~10% so far in the current financial year. We assume ~15% AUM CAGR over FY2027-28E, baking in 10% growth from MTM gains. Yield dilution is a continuous feature for AMCs, even though we saw a few AMCs being able to push commission cuts for equity funds in FY2025. A continuous and broad-based effort by the industry to regain some pricing power could be a long-term positive, but it is not part of the base case assumptions in our estimates,” the brokerage said. We build in a 3-4% annualised yield compression for AMCs over FY2026-27E, it added.
AMC stocks to buy
The brokerage said that it finds limited headroom for PE expansion, while earnings surprise is largely a function of market returns. KIE retains positive stance on AMCs, assigning HDFC AMC and Nippon India Life Asset Managers an ADD rating. It expects these two stocks to sustain higher valuations and deliver higher AUM growth than peers, given fund performance and stable flows.
It also maintained its positive stance on Aditya Birla Sun Life AMC, with an ADD rating, and on UTI AMC, with a buy rating, led by valuation comfort, given that recovery in operating metrics remains nascent, it said.
Brokerage ICICI Securities also believes that valuations for AMC stocks remain relatively well placed compared to capital market stocks. “As such, we believe AMC players are better placed on both structure and valuations. Key risk includes competitive pressure,” it said.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
