AMC stocks poised for a rebound? InCred Equities sees more upside than downside. Here’s what the brokerage says | Stock Market News

The recent downtrend in the Indian stock market has significantly eroded the market value of many asset management company (AMC) stocks. However, following the correction, valuations have turned attractive. With expectations of rising disposable income due to income tax relief, mutual fund inflows are likely to stabilize over the medium term. Against this backdrop, brokerage firm InCred Equities has turned positive on AMC stocks.

“The slowdown in net inflows and sluggish capital market performance in the mutual fund industry has already been factored in, and we now see a higher upside than downside,” InCred Equities stated in a report on March 21.

Are tough times coming to an end for AMC stock?

As Mint reported earlier, inflows into equity mutual funds in February dropped to ₹29,303 crore, down from ₹39,687 crore in January. This declining trend had already begun in January when inflows fell 3.6% month-on-month.

The fall in equity inflows was largely driven by stock market volatility, global uncertainties, weak earnings, and deteriorating macroeconomic indicators. Amid this broader market downtrend, AMC stocks witnessed significant declines.

InCred Equities highlighted that one-year forward price-to-earnings (P/E) ratios for all four listed AMCs have sharply declined to levels near -1 standard deviation (SD) since their listing.

“These levels were previously seen between late 2022 and June 2023. Hence, we find the risk-reward ratio attractive for AMCs, even if broader indices experience further declines,” the brokerage firm said.

Volatility may persist

InCred expects mutual fund equity inflows to remain volatile in the near term but believes this presents an opportunity for well-established AMCs to outperform newer players.

The firm has revised its AUM estimates downward by 5-8 per cent for FY26-27F and PAT estimates by 3-9 per cent for the same period, factoring in recent market volatility.

“The market remains sceptical about the sustainability of inflows into AMCs. However, we believe rising disposable income will support a steady inflow over the medium term,” InCred stated.

InCred positive on AMC stocks

InCred has retained an add rating on Nippon Life India Asset Management with a revised target price of ₹780 from ₹900 earlier. The brokerage firm values it at 27 times FY26F EPS, led by performance-led market share gains. The firm believes the stock’s correction has been overplayed.

Meanwhile, InCred has upgraded HDFC AMC to an ‘add’ from a ‘hold’ with a revised target price of ₹4,600 from ₹4,200 earlier, valuing it at 32 times FY26F EPS, as it believes it will be one of the key beneficiaries of the volatility.

InCred has also maintained an ‘add’ rating on Aditya Birla Sun Life AMC with a revised target price of ₹800 from ₹850 earlier, valuing it at 22 times FY26F EPS for its turnaround story.

Besides, it has an ‘add’ rating on UTI AMC with a revised target price of ₹1,250 from ₹1,350 earlier, valuing it at 16 times FY26F EPS, led by a potential takeover.

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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.