Jefferies has initiated coverage on SBI Funds Management with a Buy rating and ₹710 price target, implying approximately 26% upside from the stock's current market price of ₹577.40. According to reports from Jefferies, the brokerage's investment thesis centers on what it calls SBI FM's "distribution moat," supported by its exclusive association with State Bank of India, India's largest public sector bank. The Mumbai-based company, owned by State Bank of India (SBI) and Amundi, is India's largest mutual fund house with over $130 billion in assets under management. As per latest reports, SBI Funds Management listed on July 21 this year, making it a relatively new stock in the market.
SBI Funds Management manages ₹12.5 trillion in mutual fund assets, making it the largest asset management company in India. Jefferies expects mutual fund AUM to grow at an 18% CAGR between FY26 and FY29, translating into revenue growth of around 14% over the period. The brokerage also points to SBI FM's strong presence in faster-growing lower-tier markets, alongside a well-diversified scheme mix and institutional scale. Two other analysts, Emkay and Equirus, also have a 'Buy' rating on the stock, reflecting broad consensus among brokerages.
Jefferies sees SBI's 35% share of SBI FM's equity AUM as a major advantage, compared with just 8% for ICICI AMC and 6% for HDFC AMC. The brokerage expects SBI's extensive branch network, lower distribution costs and strong customer affinity to help SBI FM expand its reach, particularly beyond larger cities. According to The Economic Times, the average mutual fund assets sourced per SBI branch currently equal only 10% of the branch's retail deposits, indicating further room for expansion. SBI FM also has a higher exposure to lower-tier markets, where Jefferies expects faster growth, strengthening its distribution moat as India's mutual fund penetration deepens. The company's three largest equity schemes account for only 33% of its equity assets, reducing dependence on flagship funds.
Jefferies expects operating profit after tax to grow at a 15% CAGR through FY29, with the AMC's expanding scale helping improve operating efficiency. The brokerage's target price is based on 40 times SBI Funds Management's estimated operating profit after tax (OPAT) for September 2028, in line with the multiple assigned to HDFC AMC given similar earnings growth profiles. The company's core operating expenses stand at about 3.3 basis points of average assets under management, compared with 10-11 basis points for peers. However, PAT growth will be slower at 13% CAGR as investment assets fell 30% year on year in FY26 due to a one-time interim special dividend of ₹3,560 crore. Jefferies expects revenue to grow at a 14% CAGR and profit after tax at a 13% CAGR between FY26 and FY29.
Jefferies flagged changes in expense-ratio regulations and a sustained decline in equity-flow market share as key risks. According to The Economic Times, the brokerage estimated that a one-basis-point reduction in net equity yield could lower EPS by around 2% over FY27-29. However, SBI Funds Management shows strong fundamentals with 66% of systematic investment plans (SIPs) originating from B30 markets beyond India's top 30 cities. The company's scheme performance has improved with the number of schemes in the top performance tier rising to 2-5 in 2025 and 2026, from just one in 2024. SBI FM is trading at 37x September 2027e OPAT, representing a 5% discount to HDFC AMC and 10-20% discount to ICICI AMC/NAM.
