Aditya Birla Sun Life AMC: Why You Should Invest in this Fund House

The past one year has been a roller-coaster ride for the markets due to a variety of factors: an unexpected coalition government after elections, FPIs selling till recent months, anaemic domestic earnings amid weak demand, interest rate cuts, reciprocal trade tariffs and geopolitical tensions.

In such a situation, businesses dependent mostly on the markets and their prospects are expected to find the going tough.

However, domestic asset management companies have not only weathered these challenges, but have also come out stronger with healthier operating metrics.

Aditya Birla Sun Life AMC (ABSL AMC) is one such player that has put up an improved show in this turbulent phase. It manages equity, debt and hybrid funds. It also runs portfolio management services (PMS) and alternative investment funds (AIFs). The AMC managed a total of ₹4.06 lakh crore in assets  as of March 2025 (quarterly average AUM).

We had given a ‘buy’ recommendation in September 2024 at ₹731. The stock has rallied about 11 per cent from that level, but still presents investors with reasonable upside.

At ₹803, the ABSL AMC stock trades at 21 times its likely per share earnings for FY26, at a discount to UTI AMC, despite enjoying higher net margins than the latter. These multiples are among the lowest prevalent in the asset and wealth management companies (usually more than 30 times). Investors can buy the stock with two-three-year perspective.

Rise in the equity AUM even in turbulent markets, a SIP book with customers staying in for long, a solid passive business and steady traction in its large debt fund portfolio are positives for the company. A recent large mandate to manage ESIC (Employees’ State Insurance Corporation) and robust increases in the offshore book enhance the firm’s prospects.

The company’s net margin – at more than 55 per cent in FY25 – compares favourably with the best in the asset management business.

In FY25, the firm’s revenues grew 25 per cent year on year to ₹1,684.8 crore, while net profits rose 19 per cent to ₹930.6 crore.

Traction across classes

ABSL AMC managed ₹3.82 lakh crore in quarterly average AUM as of March-end 2025, which was up a good 15 per cent even in a difficult year. Equity assets under management rose 11 per cent compared to figures as of end-March 2025.

Monthly average SIP flows have remained steady rising about 5 per cent to ₹1,316 crore as of March 2025. Overall SIP AUM stood at a healthy ₹76,600 crore as of March 2025.

The persistence of investors is what makes ABSL AMC’s SIP book all the more attractive. About 95 per cent of ABSL AMC’s systematic investment accounts tend to stay on for more than five years, while 89 per cent stick around for over 10 years indicating a resilient book.

ABSL AMC’s equity schemes had not been at their best and were relative underperformers in the rally that started during the Covid period. In the last two years, some of the older equity funds have come back into the reckoning by delivering reasonably healthy returns.

Even after indexation was removed and gains from debt funds were taxed at the applicable slab, the fund house’s fixed income schemes continue to generate substantial investor interest. Fixed income quarterly average assets under management as of March 2025 rose 18 per cent to ₹2.13 lakh crore.

Across debt fund categories, however, ABSL AMC has consistently been among the best in terms of returns and consistency over all timeframes – short, medium and long terms. Indeed, the fund house’s overall AUM mix has 53.7 per cent coming from debt and liquid funds.

Despite the higher debt fund proportion in the asset mix, the AMC has a healthy yield (Revenue to  total AUM) of 45 basis points (bps), which compares favourably with many other large fund houses and is higher than UTI AMC. On equity assets, the fund house earns yields of 68-69 bps, while PMS AUM earns 100 bps, pointing to healthy realisations.

Other segments click

Many investors like to take the passive route and the trend is catching up. The fund house has been able to gain from the trend. Assets from ETFs, fund of funds and index schemes grew over 20 per cent to ₹34,700 crore as of March 2025.

ABSL AMC’s PMS/AIF segments are faring stronger than the mutual fund space. The company had quarterly average AUM of ₹11,300 crore in the PMS/AIF space as of March 2025, a rise of 268 per cent. This AUM also includes a mandate to manage ESIC’s corpus, which stood at around ₹7,500 crore as of March 2025.

The AMC manages offshore funds to the tune of ₹12,100 crore, which rose 14 per cent.

Given that the HNI investments in such newer avenues are growing at a healthy clip, the space offers considerable runway for growth.

Published on July 5, 2025

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