Valuation verdict: How does SBI Funds Management IPO fare against peers?

India’s largest asset management company (AMC) by assets under management (AUM), SBI Funds Management, is set to tap the primary market with an ₹11,692.91-crore initial public offering (IPO), with valuation emerging as a key factor for investors evaluating the issue.

 

The IPO, which is entirely an offer for sale (OFS), will see promoters State Bank of India (SBI) and Amundi India Holding divest a combined 203.7 million equity shares.

 

SBI Funds Management’s IPO price band of ₹545 to ₹574 implies a price-to-earnings (P/E) multiple of 36 to 38 times FY26 earnings, based on an earnings per share (EPS) of ₹15.08. This places the issue below the listed peer average of approximately 42 times, and specifically below ICICI Prudential AMC at 49 times, Nippon Life India AMC at 51 times, and HDFC AMC at 42 times. 

(Source: SBI Funds Management RHP)

 

                     

Analysts assess valuation appeal

With the issue valuation coming below the broader peer average, analysts are assessing whether the discount adequately factors in the company’s scale, profitability, and growth prospects, or leaves room for further upside.

 

The valuation debate, according to Harshal Dasani, business head at INVasset PMS, has shifted from a premium concern to a discount opportunity.

 

"On Return on Net Worth, SBI Funds Management prints 43 per cent, materially above HDFC AMC at 33 per cent, Nippon Life at 35 per cent, ABSL AMC at 26 per cent, and UTI AMC at 11 per cent, with only ICICI Prudential AMC higher at 86 per cent. That combination of the lowest P/E among the two closest peers by scale, the second-highest RoNW in the cohort, and the largest AUM base at 15.3 per cent market share defines a franchise being offered at a favourable multiple. FY26 revenue at ₹4,389 crore supports the underlying quality. Forward P/E on 18 to 20 per cent PAT compounding brings the multiple below 22 times by FY29, further below the cohort average," explained Dasani.

 

Dasani added that the pure OFS structure and post-listing supply dynamics remain risk factors, but the entry multiple no longer requires heroic earnings growth to be defensible.

Scale, efficiency underpin investment case

Meanwhile, SBI Securities said the company enters the market with a leadership position in India’s asset management industry and benefits from its parentage.

 

"BIFM is the largest asset manager in India with strong dual parentage of SBI and Amundi, along with a strong position in active mutual fund schemes," said the brokerage, adding that the company continues to benefit from SBI’s brand and nationwide distribution network.

 

"Further, it derives synergies from the brand name and pan-India distribution reach of State Bank of India, which augurs well for continued growth and deeper penetration," the brokerage said.

 

SBI Securities also highlighted that between FY24 and FY26, total QAAUM, mutual fund QAAUM, and equity QAAUM grew at a CAGR of 14 per cent, 17 per cent, and 22 per cent, respectively. The company commands the lowest operating expense ratio (as a per centage of QAAUM) among industry peers, showcasing scale benefits and operational efficiency.

 

Looking ahead, the brokerage expects favourable industry tailwinds to support growth.

 

"The mutual fund industry in India is expected to grow at a CAGR of around 16-17 per cent, while industry-wide SIP AUM is projected to grow at a CAGR of 23-26 per cent during FY26-FY29, aided by rising financialisation of savings, deeper penetration into B30 cities and an increase in demat accounts, which augurs well for the company," it said.

SBI Funds Management IPO details

The ₹11,692.91-crore SBI Funds Management IPO is entirely an offer for sale (OFS) of 20.37 crore equity shares by promoters State Bank of India (SBI) and Amundi India Holding. The public issue will open for subscription on July 14, 2026, and close on July 16, 2026.

 

At the upper end of the price band, retail investors will have to invest ₹14,924 for one lot of 26 shares. They can bid for up to 13 lots (338 shares), taking the maximum investment to ₹1,94,012.

 

The basis of allotment is expected to be finalised on July 17, while the shares are scheduled to list on the BSE and NSE on July 21, 2026, subject to completion of the issue process.

 

Kotak Mahindra Capital Company, Axis Capital, BofA Securities India, HSBC Securities and Capital Markets (India), ICICI Securities, Jefferies India, JM Financial, Motilal Oswal Investment Advisors, and SBI Capital Markets are the book-running lead managers to the issue, while KFin Technologies is the registrar.

 

As the IPO is entirely an OFS, SBI Funds Management will not receive any proceeds from the issue. According to the Red Herring Prospectus (RHP), the net proceeds, after deducting offer-related expenses and applicable taxes, will accrue to the respective selling shareholders.

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(Disclaimer: Views and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers' discretion is advised.)