<\/p>
Every month, Indian investors channel more than \u20b930,000 crore into mutual funds through systematic investment plans (SIPs), underscoring the country’s growing shift from traditional savings to financial assets. It is against this backdrop that SBI Funds Management, India’s largest asset management company (AMC), is launching its \u20b911,692 crore initial public offering (IPO) on July 14.<\/p>
Given its dominant market position, one question has caught investors’ attention: Why is SBI Funds valued at a discount to listed peers despite being the country’s largest mutual fund house?<\/p>
SBI Funds Management oversees \u20b912.51 lakh crore in mutual fund assets and commands a 15.3% market share, making it India’s largest AMC by mutual fund quarterly average assets under management (QAAUM). Yet the IPO is priced at around 38 times FY26 earnings, below HDFC AMC’s roughly 40x and ICICI Prudential AMC’s nearly 48x valuations.<\/p>
Scale but higher profits<\/strong><\/p> The answer lies in how an asset management company earns money.<\/p> Unlike banks, where a larger balance sheet often translates into higher earnings, an AMC’s profitability depends on the type of assets it manages rather than just the total assets under management.<\/p> MUST READ:\u00a0SBI Funds, NSE, Jio Platforms: Will mega IPOs derail secondary market momentum?<\/strong><\/p> Active equity funds typically generate significantly higher management fees than debt funds, passive products or institutional mandates. As a result, two fund houses with similar AUM can report very different revenues and profits.<\/p> Revenue yield<\/strong><\/p> One of the biggest reasons for SBI Funds’ lower valuation is its revenue yield, or the income earned on every rupee of assets managed.<\/p> Despite being the market leader by AUM, SBI Funds generates a revenue yield of around 35 basis points, compared with approximately 52 basis points for ICICI Prudential AMC and 44 basis points for HDFC AMC.<\/p> This lower monetisation means that while SBI Funds manages more money than its competitors, it earns relatively less revenue from those assets.<\/p> MUST READ:\u00a0Here’s what to expect from SBI Funds Management IPO<\/strong><\/p> Passive investing<\/strong><\/p> A major reason for the lower yield is the company’s asset mix.<\/p> Around 32.4% of SBI Funds’ mutual fund assets are invested in passive products, including exchange-traded funds (ETFs) and index funds. By comparison, passive assets account for around 13.1% of ICICI Prudential AMC’s portfolio and 9.4% at HDFC AMC.<\/p> Passive funds typically charge much lower expense ratios than actively managed equity schemes. While they help build scale and attract investors, they also generate lower fee income for the AMC.<\/p> Peer Comparison<\/strong><\/p> Particulars \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0SBI Funds \u00a0 ICICI Pru \u00a0 HDFC AMC \u00a0 Nippon India \u00a0 Aditya Birla \u00a0 UTI AMC Institutional assets<\/strong><\/p> SBI Funds also manages around \u20b916.9 lakh crore under portfolio management and advisory mandates, with more than 90% of these assets coming from provident fund and pension fund mandates, including EPFO and other PF trusts.<\/p> These mandates significantly strengthen the company’s institutional franchise and boost its overall assets under management. However, they operate at substantially lower fee structures than retail mutual funds, contributing relatively less to profitability.<\/p> Financial Snapshot (\u20b9 million)<\/strong><\/p> Particulars \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 FY26 \u00a0 \u00a0 \u00a0 \u00a0FY25 \u00a0 \u00a0 \u00a0 \u00a0FY24 Can the valuation gap narrow?<\/strong><\/p> The company believes its asset mix is gradually improving. Equity assets have steadily increased over the past few years and now account for nearly 46% of mutual fund assets, up from 36% in FY23. Management also expects active assets to continue growing, supported by a monthly SIP book of more than \u20b94,000 crore, much of which flows into active equity schemes.<\/p> MUST READ:\u00a0Is India’s IPO pipeline creating a new generation of investor-ready startups?<\/strong><\/p> Another long-term opportunity lies in SBI’s vast customer base. While the bank has around 35 crore KYC-compliant customers, only about 55 lakh currently invest through SBI Funds. Expanding mutual fund penetration within this ecosystem could drive future growth.<\/p> The IPO is entirely an Offer for Sale (OFS) by State Bank of India and Amundi, meaning the company is not raising fresh capital. For an asset-light business such as asset management, that is not unusual. The real investment thesis lies elsewhere: whether SBI Funds can improve its asset mix, increase higher-margin active equity assets and convert its unmatched distribution network into stronger earnings growth. If it succeeds, investors believe the current valuation discount to listed peers could narrow over time.<\/p> MUST READ:\u00a0July IPO rush: SBI MF, Zepto, Manipal Health & others lined-up in Rs 45,000 cr fundraising\u00a0<\/strong><\/p> <\/div> Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.<\/i><\/p> #India039s #largest #AMC #coming #market #SBI #Funds #IPO #cheaper #listed #peers1783787039<\/p> ","protected":false},"excerpt":{"rendered":" Every month, Indian investors channel more than \u20b930,000 crore into mutual funds through systematic investment plans (SIPs), underscoring the country’s growing shift from traditional savings to financial assets. It is against this backdrop that SBI Funds Management, India’s largest asset management company (AMC), is launching its \u20b911,692 crore initial public offering (IPO) on July 14. […]<\/p>\n","protected":false},"author":1,"featured_media":11449,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37],"tags":[2647,5852,4562,11103,1398,834,201,39931,1724,17111,1514],"class_list":["post-11448","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-content-marketing","tag-amc","tag-cheaper","tag-coming","tag-funds","tag-india039s","tag-ipo","tag-largest","tag-listed","tag-market","tag-peers","tag-sbi"],"acf":[],"_links":{"self":[{"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=\/wp\/v2\/posts\/11448","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11448"}],"version-history":[{"count":0,"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=\/wp\/v2\/posts\/11448\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=\/wp\/v2\/media\/11449"}],"wp:attachment":[{"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11448"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11448"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/longzhuplatform.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11448"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Management \u00a0 \u00a0 \u00a0AMC \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 AMC\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Sun Life AMC<\/strong>
————————————————————————————————————————————–
MF QAAUM (\u20b9 bn) \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a012,509.98 \u00a0 \u00a011,889.10 \u00a0 11,302.40 \u00a0 \u00a0 \u00a08,807.30 \u00a0 \u00a0 \u00a0 \u00a06,486.90 \u00a0 \u00a0 \u00a04,998.70
Revenue from
Operations (\u20b9 mn) \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a043,894.88 \u00a0 \u00a057,646.30 \u00a0 41,221.60 \u00a0 \u00a0 27,087.40 \u00a0 \u00a0 \u00a0 18,450.30 \u00a0 \u00a0 16,980.50
P\/E (x) \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a038.12 \u00a0 \u00a0 \u00a0 \u00a049.38 \u00a0 \u00a0 \u00a0 41.71 \u00a0 \u00a0 \u00a0 \u00a0 51.10 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 34.46 \u00a0 \u00a0 \u00a0 \u00a0 31.57
Basic EPS (\u20b9) \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 15.08 \u00a0 \u00a0 \u00a0 \u00a066.73 \u00a0 \u00a0 \u00a0 66.77 \u00a0 \u00a0 \u00a0 \u00a0 24.05 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 33.76 \u00a0 \u00a0 \u00a0 \u00a0 31.51
RoNW (%) \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a043.02% \u00a0 \u00a0 \u00a0 85.80% \u00a0 \u00a0 \u00a032.90% \u00a0 \u00a0 \u00a0 \u00a034.50% \u00a0 \u00a0 \u00a0 \u00a0 \u00a025.53% \u00a0 \u00a0 \u00a0 \u00a011.22%
NAV per Share (\u20b9) \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 29.28 \u00a0 \u00a0 \u00a0 \u00a084.39 \u00a0 \u00a0 \u00a0215.42 \u00a0 \u00a0 \u00a0 \u00a0 73.01 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0139.94 \u00a0 \u00a0 \u00a0 \u00a0350.50<\/p>
—————————————————————
Revenue from Operations \u00a0 \u00a0 \u00a0 \u00a0 \u00a043,894.88 \u00a0 35,977.57 \u00a0 26,905.58
Other Income \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a05,866.18 \u00a0 \u00a06,383.94 \u00a0 \u00a07,355.21
Total Income \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 49,761.06 \u00a0 42,361.51 \u00a0 34,260.79
Total Expenses \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a09,706.16 \u00a0 \u00a08,718.13 \u00a0 \u00a07,524.57
EBITDA \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 40,584.44 \u00a0 34,129.42 \u00a0 27,188.23
Profit Before Tax \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a040,054.90 \u00a0 33,643.38 \u00a0 26,736.22
Profit After Tax \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 30,673.76 \u00a0 25,401.54 \u00a0 20,727.85
PAT Margin (%) \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a061.6% \u00a0 \u00a0 \u00a0 \u00a060.0% \u00a0 \u00a0 \u00a0 60.5%
Basic EPS (\u20b9) \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 15.08 \u00a0 \u00a0 \u00a0 \u00a012.53 \u00a0 \u00a0 \u00a0 10.29
Return on Net Worth (%) \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 43.02% \u00a0 \u00a0 \u00a0 33.77% \u00a0 \u00a0 \u00a036.05%
Total Assets \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 64,204.47 \u00a0 87,718.59 \u00a0 71,069.31
Total Equity (Net Worth) \u00a0 \u00a0 \u00a0 \u00a0 59,630.62 \u00a0 82,975.33 \u00a0 67,477.47
Total Liabilities \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 4,573.85 \u00a0 \u00a04,743.26 \u00a0 \u00a03,591.84
Net Cash from
Operating Activities \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 54,620.75 \u00a0 29,579.18 \u00a0 17,783.47<\/p>