AMC stocks outperform with up to 53% rally in 6 months; more steam left?

Shares have risen as much as 53% in six months

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Asset management company (AMC) stocks have delivered sharp gains in the past six months, outperforming the broader market, aided by strong mutual fund (MF) inflows, robust growth in assets under management (AUM), and rising retail participation through systematic investment plans (SIPs), analysts said. 

Among listed AMCs, HDFC AMC has surged 53.4 per cent, followed closely by Nippon Life India AMC (52.9 per cent), BSE data showed. Aditya Birla Sun Life AMC gained 44.3 per cent, while UTI AMC advanced 47.2 per cent. KFin Technologies rose 21.2 per cent, and Shriram AMC added 28.8 per cent. By comparison, the BSE Sensex climbed just 10 per cent over the same period. 

Kranthi Bathini, director of equity strategy at WealthMills securities, said: “With rising disposable incomes, accelerating digitalisation, and savings shifting steadily from physical assets to financial instruments, Indian retail investors are becoming far more equity-savvy. Systematic investment plans, exchange-traded funds (ETFs), and real estate investment trusts (Reits) are beginning to diverge from traditional parking grounds like gold and silver. Given this environment, AMC stocks are uniquely positioned to benefit from structural tailwinds.” 

SIP momentum underpins flows 

That said, despite moderation in active equity inflows, analysts believe the SIP-led resilience in industry flows sets the stage for an earnings recovery for asset managers. According to Nuvama Institutional Equities, active equity net inflows fell 25.1 per cent month-on-month (M-o-M) in August to ₹42,360 crore, largely due to a steep 49.8 per cent drop in lumpsum inflows to ₹14,100 crore. However, SIP contributions remained stable at ₹28,270 crore, down just 0.7 per cent sequentially. 

“AMCs and RTAs (registrar and transfer agents) would report a recovery in earnings growth quarter-on-quarter (Q-o-Q) on the back of steady inflows led by SIPs and stable equity markets. Our top picks in the sector are HDFC AMC (target price ₹6,530), NAM (₹1,010), and KFin Tech (₹1,540),” said Madhukar Ladha and Mahrukh Adajania of Nuvama in a note dated September 10. In a report on Wednesday, Meghna Luthra of InCred Research also said: "We believe this slowdown (in SIP) is transitory and will turn around once the geopolitical stress and market volatility ease.”

 

What lies ahead? 

While valuations of AMC stocks have run up sharply alongside a surge in investor participation, analysts remain constructive on the sector given its structural growth levers. Steady SIP flows, growing retail participation, and rising share of passive funds are expected to provide a durable earnings cushion. 

Luthra said, "We believe any softness in select AMC stocks on account of market volatility will give a good opportunity to add… We remain optimistic over the mid- to long-term horizon amid improving geographic penetration as well as the rising popularity of mutual fund schemes, mainly among the young and mid-income investors." 

Whether the sharp rally in AMC stocks has more steam left will depend on the trajectory of equity markets and fund flows, but brokerage houses see room for further upside in key players like HDFC AMC, NAM, and KFin Tech. 

Among individual stocks, NAM India (target price ₹920) remains the top pick for InCred for its consistent performance-led market share gains. The brokerage appreciates the yield protection by HDFC AMC (‘Hold’, target price ₹5,600), although the run-up in the stock price makes the risk-reward ratio unfavourable. "We maintain ‘Add’ rating on ABSL AMC (target price ₹1,000) for the slowdown in market share loss and its turnaround story. The undercurrent of likely acquisition of UTI AMC (‘Add’, target price ₹1,600) makes the stock attractive," it noted. 

Meanwhile, Bathini said: “Although much of the recent rally is already priced in, the fundamentals — rising AUM, steady retail flows, growing passive fund adoption, and operating leverage — suggest there is still room for further upside over the medium- to long-term.”