Prabhudas Lilladher Rates ICICI AMC ‘BUY’ Ahead Of Listing, Sees 39% Upside

Brokerage Prabhudas Lilladher has initiated protection on ICICI AMC with a BUY score and a goal value of INR 3,000, versus the IPO allotment value of INR 2,165. The implied upside is roughly 39%, a punchy name for a big, scaled asset supervisor in a aggressive market.

The framing of the report is unambiguous: ICICI AMC, in PL’s view, sits in a “position of dominance due to strong fundamentals”—a dominance they argue is seen in three measurable locations:

(1) fairness efficiency translating into industry-leading web fairness circulation market share,
(2) superior yield economics pushed by a decrease payout construction, and
(3) structural distribution benefit through ICICI Bank’s ecosystem, supplemented by a meaningfully diversified non-mutual-fund income stream.

Prabhudas Lilladher values ICICI AMC IPO at 38x Sep’27 core EPS to reach on the INR 3,000 TP, whereas additionally noting that on the “upper band” stage of INR 2,165 the inventory displays about ~27x Sep’27 core EPS, implying a low cost of ~16–17% versus HDFC AMC and Nippon Life India AMC (NAM) at ~32x. The subtext: PL believes the market is at present pricing ICICI AMC as “one of the pack,” whereas the dealer expects it to earn the correct to be priced as “best in class.”

Why Prabhudas Lilladher’s Coverage Initiation on ICICI AMC Matters

Asset administration corporations are sometimes offered as “market proxies,” however the market has change into extra selective in what it rewards. In an AMC mannequin, market ranges matter, however web flows matter extra as a result of flows construct sturdy AUM, which builds payment revenues, which builds working leverage. The finest AMCs more and more separate themselves via:

1. Persistent funding efficiency (to win flows),
2. Distribution benefit (to maintain flows at low value),
3. Pricing/yield energy (to monetise AUM effectively),
4. Diversification (to scale back earnings volatility and dependence on a single payment stream).

PL’s argument is that ICICI AMC checks these bins extra convincingly than the market is at present acknowledging.

Core of Prabhudas Lilladher’s Bullishness on ICICI AMC

Prabhudas Lilladher’s BUY on ICICI Prudential AMC rests on 4 reinforcing levers: performance-led flows, scale-with-yield self-discipline, structural distribution, and diversification.

1) Performance Translating Into Market-Share Gains:

PL argues ICICI AMC’s edge isn’t just measurement, however repeatable efficiency high quality: strongest 1-year exhibiting and persistently top-3 within the 3-year bucket since Feb’22, with ~90% of fairness AUM in Q1 (prime quintile) as of Nov’25. In India’s retail-driven MF market, that form of persistence tends to transform into distributor confidence, SIP stickiness and incremental inflows. The proof-point, per PL, is industrial: web fairness circulation market share of 15.2% (FY25) and 17.5% (8MFY26)—above its fairness AUM “stock” share—implying ICICI AMC is taking share, not merely defending it, and probably establishing a compounding loop the place circulation share pulls inventory share upward over time.

2) Yield Leadership Despite Scale (Better Monetisation of AUM):

Where massive AMCs usually see payment compression, PL says ICICI AMC is holding a yield benefit: ~67 bps fairness yield (FY25) versus HDFC AMC (~62.5), SBI (~57.5) and NAM (~61.1), plus industry-leading ~32.6 bps debt yield—supporting ~47.4 bps blended MF yield. PL ties this to structural economics: decrease payout ratio (~46%), a extra beneficial banca + direct combine (sometimes decrease fee depth), and broader energetic fairness product set (43 schemes) that reduces focus danger and helps payment realisation. In an AUM-heavy mannequin, just a few bps of yield is materially earnings-accretive—that is central to the “premium earnings” case.

3) Distribution Moat through ICICI Bank’s Eecosystem:

PL treats ICICI Bank’s platform as a structural sourcing channel, not a cyclical tailwind: 7,246 branches, digital integration, and a comparatively closed structure the place ICICI AMC captures ~73.7% of the financial institution’s MF gross sales and ~70% of MF-related AAuM. Beyond volumes, this issues as a result of bank-led flows could be extra secure in unstable markets and infrequently include higher fee economics than open-market distribution—supporting each progress and yields.

4) Diversification Through Alternates:

Finally, PL highlights that ICICI AMC is much less “single-stream” than friends: non-MF income ~9.2% (FY25), backed by alternates QAAuM ~INR 72,900 cr (Sep’25) throughout PMS (~INR 25,400 cr), AIF (~INR 147 cr) and advisory (~INR 329 cr). The strategic worth is resilience—diversified payment swimming pools can cushion regulatory strain on MF economics (TER/commissions) and assist the franchise command a platform a number of, not only a mutual-fund a number of.

Numbers PL is Underwriting:

ICICI AMC goal value is predicated on a clear progress trajectory:

AAuM Growth

• AAuM (INR Cr): 8,35,600 (FY25) → 10,57,000 (FY26E) → 12,74,400 (FY27E) → 14,92,600 (FY28E)
• AAuM progress (%): 38.7% (FY25), 26.5% (FY26E), 20.6% (FY27E), 17.1% (FY28E)

Revenue & Profitability

• Revenue (INR Cr): 4,682,8 (FY25) → 7,693.7 (FY28E)
• Core Income (INR Cr): 3,236.2 (FY25) → 5,382.8 (FY28E)
• Core PAT (INR Cr): 2,427.9 (FY25) → 4,037.1 (FY28E)
• Core EPS (INR): 49.1 (FY25) → 61.0 (FY26E) → 71.5 (FY27E) → 81.7 (FY28E)

PL explicitly states an expectation that fairness AAuM CAGR over FY25–28E will run about 2.5% greater than the {industry}, supporting a core PAT CAGR of ~18.5%, which the report positions as finest amongst listed friends.

There can be a sensible nuance within the report: as fairness AUM expands meaningfully, yields could development down (a standard {industry} phenomenon). Yet PL argues working leverage and blend ought to nonetheless ship sturdy earnings development, with core PAT to AUM anticipated round 26–27 bps over FY26–28E.

Peer Context: ICICI AMC vs HDFC AMC vs NAM

PL offers a peer comparability that frames ICICI AMC as a near-equal platform to HDFC AMC in profitability, with differentiated strengths in distribution and income diversification.

Some comparability anchors from the report’s framework:

• ICICI AMC exhibits sturdy scale: MAAuM ~INR 10.75 lakh crore (Nov’25) and market share ~13.2% total; fairness market share ~13.8% as of Nov’25.
• Valuation comparability: ICICI AMC on the referenced value implies ~27x Sep’27 core EPS, versus ~32x for HDFC AMC and NAM (as cited by PL).
• PL’s declare is forward-looking: ICICI AMC “may eventually command a premium to HDFC AMC” if distribution and diversification benefits persist whereas profitability stays comparable.

This is the crux: is ICICI AMC a reduced chief, or a chief with structurally decrease a number of? PL is explicitly betting on the previous.

Risks PL Flags

PL lists the important thing dangers, and traders ought to translate them into watchpoints:

• Market volatility → danger to fairness inflows and AUM; watch SIP persistence, redemption charges, and distributor sentiment.
• Intense competitors → smaller AMCs can win flows rapidly if efficiency surges; watch circulation share versus inventory share each quarter.
• Performance danger → underperformance in flagship schemes can dent retention; watch prime scheme rankings and quartile motion.
• Regulatory danger (TER caps, fee buildings) → direct hit to yields; watch SEBI stance and {industry} lobbying outcomes.

Additionally, the report hints at a structural stress: passive progress can strain blended yields. ICICI AMC’s combine contains ETF/index publicity (with decrease yields), so traders will probably be delicate as to if energetic fairness progress offsets passive dilution.

Bottom Line

ICICI AMC goal value just isn’t a “market will go up, so AMC will go up” name. It is a extra particular wager: ICICI AMC can hold successful fairness flows, monetise these flows at superior yields, and do it with a distribution benefit that friends can’t simply replicate—whereas including stability via non-MF revenues.

If that thesis holds, the inventory’s present valuation low cost to premium friends turns into tougher to justify. If it doesn’t—if efficiency management fades, yields compress quicker than anticipated, or regulation tightens—then the inventory could behave like a scaled AMC with restricted a number of growth.

Disclaimer: This article is for informational functions solely and shouldn’t be thought-about as funding recommendation. It’s normal info primarily based on public dealer commentary. Consult a registered advisor earlier than investing.