SBI Funds Management: Centrum bets on strong franchise, growth runway; initiates Buy with 34% upside

Brokerage firm Centrum Broking has initiated coverage on SBI Funds Management with a ‘Buy’ rating and a target price of Rs 700, implying an upside of around 34% from current levels. The brokerage has titled its investment thesis “Strong Franchise, Stronger Runway”, citing SBI AMC’s distribution network, leadership in B-30 markets, growing non-mutual fund businesses and relatively low operating costs as key drivers of its growth outlook.

SBI Funds Management shares ended at Rs 518 apiece on the NSE, down 0.94% from the previous close of Rs 522.90. The stock has traded in a range of Rs 517-524 during the session.

According to Mohit Mangal of Centrum Broking, SBI AMC’s structural advantages position the asset manager for sustained growth in assets under management (AUM) and earnings. The brokerage said the company’s integration with SBI’s distribution network, expanding retail franchise, and growing presence beyond mutual funds provide significant room for further growth.


Centrum noted that SBI AMC has access to SBI’s network of more than 23,000 branches and 100 million YONO app users. The asset manager captures more than 96% of mutual fund assets mobilised through SBI branches. However, only around 5.5 million SBI customers, or less than 2% of the eligible customer base, have been converted into SBI AMC customers, according to the brokerage, indicating further scope for cross-selling mutual funds and other investment products.

AUM growth remains a key driver

SBI AMC remained India's largest asset manager, with monthly average assets under management (MAAUM) of around Rs 12.7 trillion and a 15.1% overall market share as of June 2026, Centrum said. Its equity market share stood at 12.1%.

The brokerage highlighted the stronger growth in equity assets, with equity quarterly average AUM (QAAUM) growing at a 31% CAGR between FY23 and FY26, compared with 21% growth in overall QAAUM, which reached Rs 12.1 trillion.

Centrum expects overall QAAUM to grow at around 14% CAGR between FY26 and FY29, reaching approximately Rs 17.9 trillion. Equity QAAUM is expected to grow faster, at around 16% CAGR, reaching Rs 9 trillion.

Non-MF businesses add to growth runway

Beyond mutual funds, Centrum highlighted SBI AMC’s presence in portfolio management services (PMS), alternative investment funds (AIFs), offshore investments and the recently launched specialised investment fund (SIF) segment.

The brokerage said SBI AMC operates India’s largest PMS platform, with an estimated 40% market share. PMS and advisory QAAUM stood at Rs 16.9 trillion in FY26, while AIF QAAUM rose to Rs 65.7 billion.

Centrum expects AIF and offshore QAAUM to grow at a 30% CAGR between FY26 and FY29, while PMS and advisory QAAUM is expected to grow at 12% CAGR. Overall non-MF QAAUM is projected to grow at 12% CAGR to Rs 23.9 trillion by FY29.

SIF AUM stood at around Rs 35 billion as of June 2026. Non-MF businesses contributed around 4% of SBI AMC’s operating revenue at the end of FY26, with the brokerage expecting their contribution to remain at a similar level through FY29.

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Retail franchise expands

Centrum also pointed to SBI AMC’s increasing exposure to individual investors. Individual MAAUM rose from Rs 631 billion in FY17 to Rs 5.8 trillion in FY26, taking its share of total MAAUM from 39% to 48%.

The AMC's investor base expanded at a 28% CAGR to 18 million in FY26. The brokerage noted that its folios-per-investor ratio of 1.24x remains relatively low compared with peers, suggesting scope to cross-sell additional schemes to existing investors.

The brokerage also highlighted SBI AMC’s position in B-30 markets, where B-30 assets account for 23.2% of its total MAAUM, compared with an industry average of 18.4%. Its B-30 market share stood at 18.9% as of June 2026.

New B-30 SIP registrations increased from 2.3 million in FY23 to 6.1 million in FY26, representing a 38% CAGR, compared with a 28% CAGR in T-30 registrations.

Cost advantage supports operating leverage

Centrum said SBI AMC maintains one of the lowest expense yields among listed peers at around 8 basis points of QAAUM, compared with approximately 15-16 bps for ICICI AMC and 9-12 bps for HDFC AMC.

Operating revenue yield improved to 35 bps in FY26 from 32 bps in FY25, while equity yield rose by 3 bps year-on-year to 59 bps. The brokerage expects blended revenue yield to remain broadly stable through FY29, supported by a rising share of equity assets.

SBI AMC's opex yield is expected to average around 7.5 bps during FY26-FY29, according to Centrum, providing scope for operating leverage as the asset base expands.

Earnings growth expected to moderate

SBI AMC reported profit after tax (PAT) of Rs 30.7 billion in FY26, representing a 32% CAGR from Rs 13.4 billion in FY23. Centrum expects earnings growth to moderate from these levels, with PAT projected to grow at a 13% CAGR between FY26 and FY29 to Rs 44.3 billion.

Core PAT is expected to grow at a 15% CAGR to Rs 39.5 billion over the same period. Operating revenue, which rose from Rs 21.6 billion in FY23 to Rs 43.9 billion in FY26, is projected to grow at a 14.2% CAGR to Rs 65.4 billion by FY29.

Centrum currently values SBI AMC at 34 times September 2028 estimated earnings, applying a discount to the target multiples of larger peers while recognising what it describes as the company's franchise strength and growth outlook. The stock currently trades at 25 times September 2028 estimated earnings, according to the brokerage.

Key risks

Centrum flagged slower-than-expected AUM growth, equity net outflows, underperformance of schemes and regulatory intervention affecting total expense ratios (TERs) as key risks to its thesis.

Disclosure: This article has been written by Kumar Gaurav, who is not a Sebi-registered Research Analyst or an Investment Adviser. Gaurav and their ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective Sebi-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here