SBI MF IPO vs ICICI AMC: Which is the better bet for investors ahead of Rs 11,600 crore issue?

SBI Funds Management’s proposed Rs 11,600 crore IPO has put the spotlight back on India’s listed asset management companies, with investors weighing whether the country’s largest mutual fund house offers better value than peers such as ICICI Prudential AMC, HDFC AMC and Nippon Life India AMC.

SBI Funds Management IPO details

The issue is entirely an offer for sale, meaning SBI Funds Management will not receive fresh capital from the IPO. The proceeds will go to the selling shareholders. Analysts said this should not be seen as a major negative because the AMC business is asset-light and does not require large capital to expand.

SBI MF IPO valuation

SBI Funds Management IPO was priced in the range of Rs 545-574 per share, valuing the company at around Rs 1.17 lakh crore at the upper end. Based on FY26 earnings, the issue is valued at about 38 times earnings, according to Paresh Bhagat, Chairman, Mangal Keshav Financial. That compares with about 41 times for HDFC AMC, 48 times for ICICI Prudential AMC and 51 times for Nippon Life India AMC.

“SBI Funds Management’s IPO stands out because it brings together two things investors like to see — market leadership and relatively reasonable pricing,” Bhagat said.

SBI MF analysis

SBI Funds Management is India’s largest asset manager, with quarterly average assets under management of around Rs 12.5 lakh crore and a market share of nearly 15%. It has held its leadership position since March 2021. The company also has a strong position in passive funds, PMS and B-30 cities, helped by the SBI brand and the bank’s wide distribution network.

Abhinav Tiwari, Research Analyst at Bonanza, said SBI Funds Management has a 15.3% market share and is also the leader in passive funds with 27.9% share. He said the company’s scale is visible in its low operating expense ratio of 0.08% of QAAUM in FY25, the lowest among the top 10 AMCs.

Its distribution strength is one of the main reasons investors are looking closely at the IPO. SBI Funds Management benefits from SBI’s banking franchise, more than 1,32,000 mutual fund distributors, YONO’s large customer base and a sticky SIP book.

Sourav Choudhary, MD, Raghunath Capital, said investors should not compare AMCs only on size. “Metrics such as earnings growth, profitability, operating margins, and valuation are equally important while comparing it with listed peers like ICICI Prudential AMC, HDFC AMC and Nippon Life India AMC,” he said.

SBI Funds Management IPO: GMP and other key details investors should know about Rs 11,693 crore offer

What should investors do?

While SBI Funds Management leads on scale, distribution and cost efficiency, ICICI Prudential AMC, however, earns more revenue from its assets despite having a smaller mutual fund AUM. This is because ICICI has a higher share of active equity funds, which carry higher fees. Nearly one-third of SBI’s AUM is in passive funds, where fees are lower.

Tiwari said SBI is stronger on scale and cost efficiency, while ICICI Prudential AMC performs better on revenue generation and monetisation.

SBI Funds Management reported a 19.9% QAAUM CAGR during FY21-26, higher than HDFC AMC, UTI AMC and Aditya Birla Sun Life AMC, but lower than ICICI Prudential AMC and Nippon India. Its higher-margin businesses have done better, with equity AUM growing 21.8% and AIF assets rising 29.2% over the same period.

For investors, the IPO offers a chance to buy into the country’s largest AMC at a valuation that analysts see as reasonable compared with listed peers. Choudhary said the IPO looks attractive for long-term investors because India’s mutual fund industry is still in a structural growth phase, helped by rising financialisation of savings, SIP inflows and retail participation.

“For short-term investors, listing gains may be steady rather than spectacular, considering the size and quality of the issue,” he said. “However, for investors with a three-to-five-year horizon, subscribing to the IPO could offer a better risk-reward than buying some of the already richly valued listed AMC stocks at current levels.”

Anish Maheshwari, MD and CEO, Vsure Investment Affairs, also said the OFS structure should be noted because the company is not raising growth capital. Still, he said the IPO gives investors a chance to participate in a large and established AMC. “I personally felt that it’s a good IPO,” he said, adding that investors can consider participating.

The short-term call may depend on listing-day gains. Bhagat said if the stock lists with a sharp gain, investors may consider booking partial profits to recover capital or rebalance allocation. The rest can be held for the long term if earnings growth remains strong and valuation stays reasonable.

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