SIP registrations surging, fund performance improving across categories, distribution expanding
Among India’s listed asset managers, Aditya Birla Sun Life AMC has carried one persistent overhang for the last several quarters — a gradual erosion of market share in a mutual fund industry that has been growing rapidly. The fourth quarter of FY26 does not erase that narrative entirely, but it offers evidence that the tide may be turning.
Fund performance has improved, flows have become more consistent, and SIP registrations jumped 16% quarter-on-quarter.
The Quarter in Brief
The headline numbers were steady rather than spectacular. Mutual fund quarterly average AUM grew 14% year-on-year to Rs 4.36 trillion. Monthly SIP contributions reached Rs 12 billion, driven by the sharp uptick in new registrations.
Revenue came in largely in line with estimates. PAT at Rs 1.87 billion was impacted by lower other income but offset by a lower tax rate, landing close to Emkay’s estimate of Rs 1.9 billion. EBITDA margin at 58.1% dipped slightly on higher operating expenses. None of these are numbers that demand attention on their own. The story lies elsewhere.
The Market Share
Market share declined 13 basis points quarter-on-quarter to 5.3% — still moving in the wrong direction on the headline. But Emkay’s framing of this is important: “the company’s pace of market share erosion has reduced in recent quarters, driven by improvement in fund performance and consistent flows.” That deceleration in erosion is meaningful. It suggests the underlying business is stabilising, even if the absolute share number has not yet turned.
What is driving the stabilisation is a genuine improvement in investment performance. Consistent flows are now coming through across flexi cap, balanced advantage, multi-asset allocation, mid-cap and small-cap funds — a breadth of category engagement that was notably absent in earlier quarters when performance was patchy. Management has indicated that flow market share is now broadly in line with book market share — which, if sustained, is the precondition for share stabilisation.
The Overhang
The change in Total Expense Ratio regulations has been a source of investor concern across the AMC sector. For ABSLAMC, Emkay estimates the gross impact at 3-4 basis points on overall revenue. Management’s response is to restructure commissions and other expenses to offset the hit — and Emkay’s assessment is that this should result in a “marginal to neutral impact on profitability.” It is not a trivial exercise, but it is a manageable one for a business with nearly 60% EBITDA margins and a disciplined cost structure.
Distribution Deepening
One of the less-discussed elements of the ABSLAMC story is geography. The company plans to add several locations in FY27 to deepen its distribution presence — a deliberate effort to reach investors beyond the large metros where AUM tends to be concentrated. In an industry where SIP penetration in smaller cities remains well below its potential, this is a sensible long-term bet. Sixteen percent quarter-on-quarter growth in SIP registrations suggests the groundwork is already producing results.
The financial profile of ABSLAMC is worth appreciating in its own right. EBITDA margins are expected to hold at approximately 59-60% through FY29. Return on equity is projected at 27% or above across the forecast period. Free cash flow yield is expected to grow steadily from under 3% today toward 4% by FY29. These are the characteristics of a cash-generative, capital-light business that does not need to reinvest heavily to grow — the kind of financial profile that tends to compound quietly over time.
What It Is Worth
| Metric | Value |
|---|---|
| Current Market Price | Rs 1,047 |
| 12-Month Target Price | Rs 1,150 |
| Upside | ~10% |
| Rating | ADD |
| Valuation | 26x FY28E P/E |
| MF QAAUM | Rs 4.36 trillion |
| EBITDA Margin FY28E | ~59.6% |
| RoE FY28E | 27.2% |
Emkay has made minor tweaks to estimates, resulting in a 1-2% cut to FY27-28 PAT following the quarter. FY29 estimates have been introduced for the first time. The ADD rating — rather than a BUY — reflects the near-term overhang of market share stabilisation still being a work in progress, and a valuation at 26x forward earnings that already prices in a degree of recovery.