ABSLAMC 4QFY26 Result Final Take: Improved SIP and net flows point to gradual turnaround – assign ADD
Aditya Birla Sun Life AMC (ABSLAMC) reported 4QFY26 PAT of Rs 1.87bn (-18.0% yoy/-30.6% qoq), ahead of EE (Rs 1.76bn), due to below-expected employee expenses (Rs 1.04bn vs EE: Rs 1.12bn) and a lower quarterly tax rate (14.7% vs 24.8% qoq)
Monthly systematic flow market share improved to 3.75% vs 3.48% in 3QFY26. Overall QAAUM rose 14.2% yoy to Rs 4.36trn, while equity QAAUM grew 16.2% yoy to Rs 1.95trn, taking its share in total QAAUM to 44.8% (vs 44.0% in 4QFY25). However, ABSLAMC’s equity QAAUM market share declined 4bps qoq to 4.14%
Management highlighted that FY26 net flows were nearly 2x FY25 levels, with improving traction across equity schemes. We note that ABSLAMC’s scheme performance has also strengthened, albeit with some moderation in Feb’26
We make marginal estimate revisions and build in ~14% earnings CAGR over FY26-FY28E. Since the last result, the stock has rallied >30% and now trades at ~24x FY28E EPS, leaving limited valuation headroom. Sustained delivery and further improvement in equity net flows remain key for further re-rating. Assign ADD (vs. LONG earlier) with a Mar’27 TP of Rs 1,100 based on 25x (earlier 20x) FY28E EPS
SIP market share rises to 3.75%; equity flow momentum improves: ABSLAMC’s monthly systematic book stood at Rs 12.0bn vs Rs 10.8bn in 3Q. Market share in monthly systematic flows increased 27bps to 3.75% in Mar’26 vs 3.48% in 3QFY26, while share in new SIP registrations also improved to 3.20% vs 3.00% qoq. Management highlighted that FY26 net flows were nearly 2x FY25 levels, with funds such as flexi cap, multi-asset, balanced advantage, multi cap, small cap and mid cap witnessing healthy traction. Recent fund performance has also improved (Exhibit 11) over the 3-year period as of Mar’26, despite some moderation in Feb’26. Overall MF QAAUM declined 1.7% qoq, resulting in a 13bps qoq drop in market share, with equity QAAUM market share falling 4bps in 4Q.
Standalone revenue yields dip 0.2bps qoq to 42.4bps: Operating revenue declined 4.2% qoq to Rs 4.58bn. Standalone revenue yields fell 0.1bps qoq to 42.4bps, while equity yields also moderated due to telescoping pricing and product mix changes. On a gross basis, PMS/AIF revenue contributes ~6% of revenue, translating into a yield of ~120bps (excl. ESIC mandate QAAUM of Rs 285bn). Employee expenses declined 3.1% qoq, aided by some reversals in 4QFY26. A new ESOP scheme was also announced in 4QFY26. Management indicated that quarterly ESOP expenses are likely at Rs 80-100mn in FY27E. We build in MF revenue yields of 40.2bps/37.5bps for FY27E/FY28E (vs FY26E: 40.4bps).
Fund performance improving; flow recovery key to re-rating – assign ADD: In Mar’26, ABSLAMC’s monthly systematic flows rose to Rs 12.0bn (3QFY26: Rs 10.8bn), lifting market share by 27bps to 3.75%. Annualised SIP flows constitute 8.3% of equity AUM. We build in ~16% AQAAUM CAGR and ~12% EBITDA CAGR over FY26-FY28E. Improved scheme performance and further growth in equity net flows remain critical for further re-rating. Assign ADD with a Mar’27 TP of Rs 1,100 (earlier Mar’27 TP of Rs 885). Key risks: Adverse equity market trends, a sharp decline in revenue yields.
