SBI Funds Management gets 2 fresh buy calls. Why Equirus and Emkay see up to 31% upside

SBI Funds Management has received bullish coverage, with Equirus Securities and Emkay Global initiating coverage with 'Long' and 'Buy' ratings, respectively. The firms have set target prices of Rs 675 and Rs 750 for March and June 2027, implying an upside of up to 31% from the IPO issue price of Rs 574.

Shares of SBI Funds Management made their D-Street debut, listing at a 7% premium to the IPO price. The stock opened at Rs 610 on the BSE, up 6.27% over the issue price of Rs 574. On the NSE, it debuted at Rs 613.30.

The brokerage said SBI Funds Management is one of the strongest franchises in India’s asset management industry, backed by scale, SBI’s distribution network, sticky SIP flows and strong profitability.


The coverage comes just as the Rs 9,795 crore IPO of India's largest mutual fund house is set to list on the stock exchanges. The public issue was open from July 14 to July 16 and was subscribed 41.66 times. The QIB portion was subscribed 140.11 times, while the NII and retail portions were subscribed 22.51 times and 3.6 times, respectively.

The IPO was entirely an offer for sale by State Bank of India and Amundi, with no fresh issue of shares. The price band was Rs 545-574 per share, with a lot size of 26 shares. The company will list on BSE and NSE.

Why bet on SBI Funds Management

Equirus said SBI Funds Management is India’s largest asset management company, with mutual fund quarterly average assets under management of Rs 12.6 lakh crore and a 15.1% market share as of June 2026. It is also the largest passive fund manager with a 26.6% market share and the second-largest active manager with a 12.7% equity QAAUM market share.

The brokerage said the company is well placed to benefit from India’s financialisation trend, as more household savings move into mutual funds, SIPs and market-linked products. SBI Funds’ equity QAAUM grew at about 33% CAGR over FY21 to June 2026, lifting the equity share of its mutual fund QAAUM to 48.8% from 27.3%. This is important because equity assets usually earn higher fees than debt and passive products.

SBI network remains the biggest moat

The strongest part of the SBI Funds story remains its parentage. Equirus said SBI Funds combines SBI’s network of more than 23,000 branches, over 100 million YONO users and 1.32 lakh mutual fund distributors. This gives it one of the widest distribution platforms in the industry.

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SBI’s own distribution network is also a large feeder for the AMC. The brokerage said around 96% of the mutual fund AUM mobilised through SBI is managed by SBI Funds. SBI also mobilised more than Rs 250 billion of net inflows in FY25.

The report said SBI’s network has helped the AMC build one of India’s strongest SIP franchises. SBI Funds had 16.2 million live SIPs, SIP AUM of Rs 1.73 lakh crore and monthly SIP inflows of Rs 40.6 billion. About 68% of new SIP registrations came from B-30 cities, while more than 97% of SIP folios had persisted for over 37 months.

That matters for investors because SIP flows are considered stickier than lump-sum money. They also reduce dependence on short-term market timing.

Profitability remains strong

Equirus highlighted SBI Funds’ asset-light business model and operating leverage. The company’s revenue grew at about 25% CAGR over FY21-FY26, faster than operating expense growth of 15% and employee cost growth of 13%. As a result, EBITDA and PAT margins expanded to about 79% and 70%, respectively.

For FY26, SBI Funds reported revenue of Rs 4,389.5 crore, EBITDA of Rs 3,471.8 crore and profit after tax of Rs 3,053.1 crore, according to Equirus. EPS stood at Rs 15, while return on equity was 42.8%.

The brokerage expects revenue to rise to Rs 5,097 crore in FY27, Rs 5,819 crore in FY28 and Rs 6,568 crore in FY29. It expects PAT to increase to Rs 3,384 crore in FY27, Rs 3,903 crore in FY28 and Rs 4,414 crore in FY29.

Equirus expects SBI Funds’ overall mutual fund average QAAUM to grow at about 16% CAGR over FY26-FY29, led by 17% CAGR in equity assets and 18% CAGR in passive assets. It also expects revenue and EBITDA to grow at about 14% and 15% CAGR, respectively, over the same period.

Valuation and risks

At the current valuation of about 30 times FY28 estimated earnings, Equirus said the stock’s valuation appears attractive. It has assigned a target multiple of 35 times price-to-earnings and set a March 2027 target price of Rs 675.

Key risks include slower AUM growth, higher competition, weak equity or debt markets, regulatory changes in total expense ratio caps and scheme underperformance. Any sustained underperformance in large schemes could hurt inflows and reduce AUM growth.

Emkay on SBI Funds Management

Emkay has initiated coverage on SBI Funds Management with a 'Buy' rating and a target price of Rs 750, implying a 31% upside from the IPO allotment price of Rs 574. The brokerage values the company at 39x FY28E earnings.

The brokerage's positive stance is anchored on three key factors. First, it believes SBI's strong brand, extensive distribution network and the significant under-penetration of mutual funds within the SBI Bank customer base position SBI Funds Management to benefit from India's long-term mutual fund growth story, particularly across B-30 towns and rural markets. SBI Mutual Fund currently serves around 5.5 million customers, compared with 21 million salary package account holders at SBI Bank, highlighting a large untapped opportunity.

Second, Emkay expects a continued shift in the asset mix towards higher-yielding products such as equity funds and alternate investments, including AIFs and PMS, to support revenue yields. Third, it expects economies of scale and operating leverage to drive an EBITDA CAGR of around 17% over FY26-29E.

The brokerage said the changing savings and investment preferences of India's middle class are driving greater adoption of mutual funds, and believes SBI Funds Management has the potential to become "the asset manager to every Indian", much like SBI has become "the banker to every Indian."

SBI’s brand power

Emkay also highlighted that SBI's brand strength and unmatched distribution reach, particularly in B-30 cities and rural India, make the company one of the best-placed asset managers to capitalise on the structural growth opportunity in the domestic mutual fund industry. The firm has already established market leadership across product segments.

Market still untapped

Despite mutual fund assets under management growing at a 20% CAGR over the 10 years to March 2026, the brokerage believes the industry remains significantly under-penetrated. Mutual fund AUM stands at 31% of bank deposits in India, compared with 216% in the U.S. and 48% in the U.K., while mutual funds account for only around 12% of household savings, leaving ample room for long-term growth.

SBI Funds Management's leadership across product segments, particularly in B-30 markets, along with its strong brand, extensive SBI-led distribution network and improving fund performance, is expected to drive AUM growth of around 17% over FY26-29E, according to Emkay. While yields are likely to remain broadly stable, the brokerage expects revenue to grow at a 16% CAGR during the period. Operating leverage and scale benefits are projected to expand margins to around 81% by FY29E, supporting an EBITDA CAGR of about 17%.

SBI Funds Management valuation

Emkay said its target valuation is broadly in line with large listed peers such as ICICI AMC and NAM. However, it believes SBI Funds Management deserves a premium given SBI's brand, distribution capabilities and the significant untapped opportunity within the bank's customer base, which could support stronger and more durable growth.

The brokerage identified key risks as a loss of market share within the SBI ecosystem, sustained underperformance of schemes, an extended downturn in equity markets and adverse regulatory changes.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)