SBI Funds Management Shares In Focus As Jefferies Sees 29% Upside

Global brokerage Jefferies has initiated coverage on SBI Funds Management with a ‘Buy’ rating and a target price of ₹710 per share, implying an upside of up to 29% from the current market price.

At 1:30 pm on Friday, SBI Funds Management shares were trading 0.24% lower at ₹561.20 apiece.

Jefferies highlighted the company's exclusive association with State Bank of India, market leadership in faster-growing lower-tier markets, diversified scheme mix and institutional scale as key differentiators.

The brokerage expects SBI Funds Management to deliver a 15% operating profit after tax (OPAT) compound annual growth rate (CAGR) through FY29, driven by an 18% CAGR in mutual fund assets under management (AUM) and operating leverage.

SBI Funds Management, India's largest asset management company, has ₹12.5 lakh crore in mutual fund assets, according to Jefferies.

SBI Funds Management Q1 Results

SBI Funds Management reported a 3.7% year-on-year rise in consolidated net profit for the quarter ended June 30, its first earnings report since going public in July.

The company's consolidated net profit stood at ₹880 crore, compared with ₹849 crore in the year-ago period, supported by robust domestic capital inflows.

Revenue from operations increased around 15% year-on-year to ₹1,153 crore. However, other income, which includes gains on financial investments and investment income, declined nearly 28%.

The company's quarterly average assets under management (QAAUM) for mutual funds grew 11% year-on-year, while actively managed equity QAAUM increased 10%.

SBI Funds Management is a joint venture between State Bank of India, the country's largest lender, and Amundi, Europe's largest asset manager.

The company attracted $31 billion worth of bids for its $1.3-billion IPO, making it India's fourth-most-subscribed issue. Its shares have declined 4% since listing.