Dalal Street is witnessing the rush of asset management companies (AMC) to get listed and currently a leading private sector AMC player is raising funds via its IPO.
Investor sentiment for leading AMCs has been strong and they are trading close to their 52-week highs – for instance, HDFC Asset Management Company (HDFC AMC) was down 2.5% in Monday trade to Rs 2,609.8, and not too far from its 52-week high of Rs 2,965 that was reached on 16 October, 2025. And Nippon Life India Asset Management gained 0.4% in Monday trade to Rs 886.4, and not too far from its 52-week high of Rs 986.7 that was reached on 23 October, 2025.
Investors have been bullish on AMC stocks since they enjoy steady inflows in the form of SIP (systematic investment plan) flows each month coupled with very high efficiency in terms of capital utilised. For instance, HDFC AMC has a return on equity (ROE) of 32.4% in the current financial year, according to Screener.in, while it is 31.4% for Nippon Life India Asset Management.
This compares with a standalone ROE of 14.3% for HDFC Bank in the current financial year, according to Screener.in, and 15.4% for Kotak Mahindra Bank. The standalone operations of the above private sector banks reflect their core banking operations.
HDFC AMC: The equity & SIP powerhouse
For HDFC Asset Management Company, its closing AUM was Rs 8,728 billion or Rs 8.73 lakh crores for the September 2025 quarter, a growth of 14% on a y-o-y basis, as highlighted by the company in its investor presentation for the quarter under review.
Its actively managed equity-oriented closing AUM was Rs 5,396 billion or Rs 5.40 lakh crore in Q2FY26, a growth of 11% on a y-o-y basis. This AMC benefited from its SIP inflows at Rs 4,510 crore in September 2025 vis-a-vis Rs 3,680 crore a year earlier. SIPs are typically for 3 to 5 years duration, and they help the AMC to earn steady fees from this inflow.
In the debt category, its closing AUM was Rs 1,841 billion or Rs 1.84 lakh crore in the September 2025 quarter, a growth of 20% on a y-o-y basis.
Mutual funds typically charge 1-1.25% per year from client portfolios for actively managed equity funds, and these charges are reviewed regularly by the regulator, SEBI. In the debt segment, mutual funds typically charge 0.2% to 0.5% per annum.
Strong growth in its equity and debt portfolio helped HDFC AMC’s consolidated revenue from operations rise 15.8% y-o-y to Rs 1,027.4 crore in the September 2025 quarter, and its net profit grew 24.7 % y-o-y to Rs 718.4 crore in the quarter under review. This AMC declared a bonus issue of 1:1 earlier this year.
Nippon Life: Riding the ETF wave
The fourth-largest AMC highlighted its quarterly average assets under management (QAAUM) was Rs 6,565 bn or Rs 6.57 lakh crore, a growth of 20% on a y-o-y basis. It has also highlighted ETF QAAUM of Rs 1,832 bn or Rs 1.83 lakh crores, a growth of 24% y-o-y. This AMC is a leading player in the ETF segment.
ETF schemes typically mirror an index, like the BSE Sensex or Nifty 50, among others, and mutual funds typically charge 0.2 to 0.5% every year for this product.
Nippon AMC has highlighted equity-oriented schemes accounted for 47.6% of its portfolio in Q2FY26 vis-a-vis 48.2% a year earlier.
Strong ETF flows helped consolidated revenue from operations grow 15.2% y-o-y to Rs 658.1 crore in the September 2025 quarter. However, higher operating costs resulted in its net profit that fell nearly 4% y-o-y to Rs 344.6 crore.
The Structural headwinds: Regulation and the passive shift
Indian AMCs like HDFC and Nippon have had a dream run in recent years as retail investors have flooded the equity markets. Many of these investors have chosen to enter the markets via mutual funds, which is reflected in the growing size of their AUMs.
Even as these AMCs benefit from this tailwind, regulatory challenges have kept expectations grounded. One instance of a regulatory measure that hurt AMCs was a mandate that limited the amount of fee that could be charged to a fund by the AMC. There are reports that more such cuts could happen in the future.
One underappreciated risk the industry faces is the growing interest in passive funds. Such funds typically have extremely low fee structures. So, even as AUMs may continue to grow, profitability may not keep up.
Valuations
Nippon Life India Asset Management trades at a consolidated P/E of 41.5, according to Screener.in, and it is 40.6 times for HDFC Asset Management Company.
If one were to isolate these multiples and look at them without context, they are undoubtedly high. But the fact is that AMCs businesses are having a dream run, and many expect them to continue growing for years to come. After all, in general, Indian investors are still early in their wealth creation journey.
Whether in hindsight these valuations will seem expensive or cheap only time will tell.
For now, like much of the investor base, let’s focus on the IPO of another heavyweight AMC.
Disclaimer:
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
Disclosure: The writer and his family do not hold the stocks discussed in this article.
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