Shares of asset management companies see mixed fortunes in the market. While Nippon India AMC jumped nearly 25 per cent year-to-date and HDFC Asset MF about 14 per cent, UTI Asset Management and Aditya Birla AMC fell 8.7 per cent and 10.5 per cent respectively. However, Shriram Asset Management was the star performer by gaining nearly 29 per cent. Amid Fitch’s US downgrade shock, AMCs, on Wednesday tumbled between 1 and 3.2 per cent.

Headroom for Nippon MF

Analysts see more headroom for Nippon MF stock price, while for others its a mixed call.

Haitong, a global market advisory firm, while retaining Outperform rating on Nippon AMC, said it values the company using a three-stage dividend discount model. “We increase our TP to ₹350 from ₹325 as increase our FY26-39 NP growth estimates from 10 per cent to 11 per cent.

According to analysts, firm market trend, recent strong inflows especially into small-cap/mid-cap funds bode well for the sector. However, SEBI’s deliberations on its proposed TER changes should be watched out.

Jefferies said: “We see profit CAGR of 12 per cent over FY23-26, and dividend payout can stay high at 80-90 per cent offering a good dividend yield of 5 per cent (FY24). We maintain our Buy call with new target price of ₹370 (₹310 earlier), based on 24x Jun-25e PE, 25 per cent discount to HDFC AMC’s target multiple.”

The company reported consolidated net profit for the June quarter at ₹236 crore, up 107 per cent from ₹114 crore in the previous year. Its revenue from operations rose 12 per cent to ₹351.4 crore (₹316.6 crore). The asset under management was at ₹4-lakh crore, including NIMF’s assets base of ₹3.14-lakh crore.

Keynote Capitals observed that the revenue growth for the quarter (12 per cent y-o-y) has aligned with AUM growth as yields have stabilised, and other income has increased substantially by 194 per cent (q-o-q). However, it downgraded NAM from Buy to Neutral with a target price of ₹330.

On the other hand, JM Financial revised its target price to ₹365 against the previous TP at ₹280. It stated that NAM has seen a sharp rebound since the lows experienced post SEBI discussion paper on proposed TER changes given that the capital markets regulator has indicated that the revised discussion paper is in the works. “While there is a broad expectation that the new discussion paper will be much more positive for AMCs, we remain watchful of the key changes,” it said.

JM Financials added that the management indicated that equity yields continue to see moderation as new lower-yielding AUM replaces old higher-yielding AUM; and noted that management took a conscious call to reduce TER for debt funds to increase volumes.

‘Limited upside’

Prabhudas Lilladher raised multiple for HDFC AMC from 27x to 35x (5-yr avg. of 40x) as core PAT is upgraded by 7 per cent for FY24/25, due to higher revenue given strong AUM growth in FY24. However, ICICI Securities downgraded the stock to Hold from Add, as it sees only a limited upside (after a strong rally) considering the constant lag in revenue growth compared to AUM growth.

For UTI Asset Management, declining yields with fresh flows and higher AUMs, along with possible reduction in yields from higher passive/ETF assets and stoppage of B-30 incentives, could continue to challenge earnings growth, said Yes Securities. It downgraded the stock to Hold with a target price of ₹824 (but higher than its previous TP of ₹730).

Betting on AUM growth

However, JM Financial has maintained its Buy on UTI AMC. “We expect the future price performance to be driven by AUM growth and improvement in operating profitability driven by expected cost moderation,” it said while setting a target price of ₹950. Gaurav Jani, Research Analyst, Prabhudas Lilladher, said: it retained Buy on UTI with a revised a price target of ₹900 (₹770 earlier), due to ‘positive surprise on equity yields.’

Similarly, Aditya Birla Sun Life was downgraded to Neutral from Add by YES Securities due to SIP traction worsened sequentially. However, InCred Equities maintained its Add rating with a revised price target of ₹470 (₹30 earlier) as it likes ABSL AMC for its diversified product portfolio, superior return ratios and favourable risk-reward ratio. ICICI Securities, on the other hand, upgraded the stock to Add (from Hold) with a revised price target of ₹435 (₹356 earlier).