Stocks

Broker's call: Aditya Birla AMC (Buy)

| Updated on: Jan 11, 2022

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.

Published on January 11, 2022

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