ICICI Pru AMC: Jefferies sees 28% upside as alternates biz AUM hits Rs 81,000 cr

Global investment bank Jefferies maintained its ‘Buy’ recommendation on ICICI Prudential Asset Management Company, and also raised its target price by 4% to Rs 3,760 apiece. This implies an upside of nearly 28% from the stock’s closing price of Rs 2,938.50 apiece on Tuesday.

The investment bank has raised its FY27-FY29 estimated earnings per share (EPS) view by 1-2%. Jefferies attributed its rating to lower reliance on marquee funds, 4-10 schemes within top and upper mid-tiers in the last five years, and expansion of alternates business, which is an additional growth lever.

Jefferies said ICICI Prudential AMC is the largest active asset manager in India and has grown faster than its peers. This growth was driven by its larger scheme basket and early entry into the portfolio management services segment.

The investment bank expects the company’s assets under management (AUM) to expand at 17% compounded annual growth rate (CAGR) over FY26 to FY29. This will be led by mutual fund AUM growing in line and alternates growing faster.

“The company has lower exposure to small- and mid-cap funds, lesser concentration of funds, and continues diversifying into PMS/AIFs,” it said, adding that earnings could increase at 14% CAGR as the AMC continues to invest in portfolio management services (PMS) and alternative investment funds (AIF), and newer initiatives like specialised investment funds (SIF).

The company’s alternates quarterly average AUM reached Rs 81,000 crore, largely equally split across PMS, AIF, and advisory. The advisory quarterly average AUM declined 6.5% sequentially in Q2 FY27 due to FII outflows, but the company has put in place structures to attract fresh flows when FII appetite improves.

“The PMS business benefited from higher inflows into small- and mid-cap funds during the quarter. Within AIFs, ICICI AMC already has private credit, real estate and private equity funds, with pre-leased offices being a potential area of opportunity,” Jefferies said.

ICICI Prudential AMC’s mutual fund quarterly average AUM grew nearly 4% sequentially. The growth was led by liquid, passives, and active equity, Jefferies said. “According to ICICI AMC, while gross flows were stable, redemptions adversely affected net flows. Further, the composition of SIPs was seen shifting toward small- and mid-cap funds,” it added.

The global investment bank expects ICICI Prudential AMC to grow significantly in the coming quarters. Mutual funds and the alternates business will drive this growth. Jefferies sees nearly 28% upside on the stock.

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