Shares of SBI Funds Management Ltd. gained on Monday, August 31, after three brokerages initiated coverage on the asset management company with 'Buy' recommendations. According to reports from CNBC TV18, BofA Securities, HSBC, and Motilal Oswal Financial Services all initiated coverage with positive ratings for the newly listed stock. Motilal Oswal has now provided detailed analysis highlighting SBI Funds as a high-quality, structurally compounding asset management franchise, supported by its market leadership, SBI-led distribution moat, underpenetrated MF industry, and significant operating leverage. The brokerage's latest coverage emphasizes SBI Funds as a high-quality, structurally compounding AMC franchise, supported by its market leadership, SBI-backed distribution network, an underpenetrated mutual fund industry and strong operating leverage.
The brokerages set varying target prices with BofA Securities offering the most conservative upside at ₹685 per share, implying an upside of around 21.5% from Friday's closing price of ₹563.80. HSBC set a target price of ₹660, suggesting a 17% upside, while Motilal Oswal Financial Services provided the most aggressive target of ₹720, implying a 28% upside from the current levels. As reported by CNBC TV18, shares rose as much as 2% on Monday and were trading around 1.4% higher at ₹571.55, continuing to trade near its IPO price of ₹574. Motilal Oswal has set a target price of ₹720, based on FY28E core P/E of 42 times, implying a potential upside of 28% from the reports current market price of ₹564. The brokerage's bull case scenario for SBI Funds implies a 51% upside potential from current levels, as it ascribes a price target of ₹850 for the newly listed stock.
According to Motilal Oswal Financial Services, SBI Funds Management is India's leading asset manager with total assets under management of ₹29.1 lakh crore as of June 2026. The company's mutual fund QAAUM recorded a 19% CAGR over FY21-26, driven by a 33% CAGR in equity QAAUM and 20% CAGR in passive QAAUM. The rising trajectory of monthly SIP flows, which increased from ₹25 billion in March 2024 to ₹40 billion, provides strong visibility for continued inflows. 98% of SIPs are registered for more than 36 months, indicating sustained investor commitment. The AMC's relatively low concentration in its top five equity schemes at ~56% of equity AUM, along with the launch of NFOs, supports ~62bp equity yields. With equity already accounting for ~47% of MF QAAUM versus ~30% in FY21, the company expects continued mix shift towards equity along with optimal commission payouts to support gradual rise in MF yields to ~36bp by FY28.
According to Motilal Oswal Financial Services, the company expects SBI Funds' mutual fund AUM to grow at a 13% CAGR over FY26-28, with improving yields and rising contribution from alternative businesses driving a 14% revenue CAGR. The brokerage projects PAT to grow at around 16% CAGR over the same period, with return on equity projected at 51-52%. HSBC expects SBI Funds' Earnings Per Share (EPS) to grow at a Compounded Annual Growth Rate (CAGR) of 17% over financial year 2026-2029. BofA Securities highlighted the company's leadership in B-30 markets and expects the company's low-cost platform and strong operating leverage to drive performance. The brokerage noted that SBI Funds' leadership in B-30 markets positions it well to benefit from the next leg of retail participation in India's equity markets, while expecting blended yields to improve as equity penetration rises and alternative assets scale up.
As reported by CNBC TV18, BofA Securities highlighted SBI Funds' leadership in B-30 markets and expects the company's low-cost platform and strong operating leverage to drive performance. The brokerage noted that SBI Funds' leadership in B-30 markets positions it well to benefit from the next leg of retail participation in India's equity markets. BofA also expects the company's strong distribution capabilities to help mitigate pressure from market share losses in assets under management. The brokerage expects SBI Funds' strong distribution capabilities to help mitigate pressure from market share losses in assets under management, while expecting improved yield management, a larger non-mutual fund AUM base and operating leverage to strengthen profitability. Motilal Oswal described SBI Funds as a high-quality, structurally compounding AMC franchise, supported by its market leadership, SBI-backed distribution network, an underpenetrated mutual fund industry and strong operating leverage.
