Weak markets hit AMCs; PL Capital sees decent earnings recovery ahead

Listed asset management companies (AMCs) are facing near-term pressure as weak equity returns have affected their market share in net equity flows, said PL Capital in a research note. It added that their core earnings growth could remain subdued in FY27, but remains positive on the sector and expects them to deliver a decent recovery in profitability going forward.

 

According to the report, weak equity returns have reduced the 1-year weighted alpha across major mutual fund players, resulting in greater fragmentation in net equity flows.

 

The contribution of the top three out of 10 players in net flows, excluding new fund offers (NFOs), fell to 34 per cent during April-July 2026 from 42 per cent in FY26. For the top 10 players, the share declined to 65 per cent from 73 per cent over the same period. 

 

 

“Listed AMCs are underperforming as sub-optimal returns are affecting market share in net equity flows,” PL Research said, estimating core PAT growth of around 10 per cent YoY for the sector in FY27. 

Net equity flow market share

 The mutual fund industry's overall closing assets under management (CLAuM) stood at ₹87.1 trillion in August 2026.

 

Returns for indices since March 2025 have remained subdued, with the Nifty 50 declining 0.8 per cent, while the Nifty 100, BSE 200 and BSE 500 gained 2 per cent, 3.5 per cent and 6.5 per cent, respectively. Mid and smallcap indices, however, delivered stronger returns of 14-22 per cent.  

 

Among mutual fund categories, largecap and flexicap funds delivered returns of 7 per cent and 13 per cent, respectively, in the same period. The midcap funds yielded a return of 25 per cent and smallcap funds gained 29 per cent. Multicap and large & midcap funds gained 17.9 per cent and 17.5 per cent, respectively. 

 

PL Capital said flows have shifted away from sectoral/thematic and large-cap funds towards flexi-cap, mid-cap, small-cap and multi-asset categories.  

Flows shifted from sectoral/thematic and large-cap to flexi/mid/small cap and multi-asset

 

On the bourses, most asset management company (AMC) stocks have remained under pressure in 2026 so far. Canara Robeco Asset Management Company has declined 25 per cent during the period, while UTI Asset Management Company has corrected 20 per cent, followed by HDFC AMC, which has slipped 9 per cent. Shriram AMC shares have tumbled over 30 per cent. SBI Funds Management, which made its market debut in July, remains below its IPO price.

 

Bucking the trend, Nippon Life India Asset Management has rallied 31 per cent, followed by Aditya Birla Sun Life AMC and ICICI Prudential AMC, which have gained 26 per cent and 20 per cent, respectively.

 Despite the near-term challenges, the brokerage said that it remains positive on the AMC sector over the medium term. It expects AMCs to deliver around 16 per cent CAGR in core PAT during FY27-29E, even after a softer FY27. 

Within the sector, the brokerage said that HDFC AMC and ICICI Prudential AMC remain its preferred picks. 

Disclaimer: Views and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.