SBI Funds Management shares drew attention on Wednesday, September 30, after Kotak Institutional Equities initiated coverage on the asset management company. The brokerage assigned a 'Buy' rating, pegging the price target at ₹600 per share. This marks the first formal institutional view on the stock from Kotak, setting a baseline for valuation among its peers.
The shift in sentiment isn't uniform across the sector. Kotak upgraded HDFC Asset Management Company from 'Add' to 'Buy', retaining its earlier price target of ₹2,800. Conversely, Aditya Birla Sun Life AMC (ABSL) saw a downgrade from 'Add' to 'Reduce', with the target trimmed to ₹1,010 per share. This divergence highlights how the brokerage views the competitive positioning of each player within the AMC landscape.
Why the split verdict? Kotak cites 'moderation in performance' and 'intensifying competition from smaller AMCs' as key risks for the large-cap players. Distributors are increasingly favoring products with higher commissions, squeezing margins for established houses. However, the brokerage notes that large AMCs still hold an edge through scale, brand strength, and established track records.
Looking ahead, Kotak sees a 'benign regulatory environment' and sticky Systematic Investment Plan (SIP) flows as medium-term supports. Yet, the report warns that sector valuations, while corrected, remain elevated compared to the broader market. For further upside, AMCs must invest in alternative and offshore offerings while managing rising pressure to retain talent. The broader market recovery will be critical for unlocking additional gains in this space.