AMC stocks draw attention despite weak Nifty 50 returns; Abakkus’ debut adds to the buzz

Investors facing a weak stock market are increasingly looking to asset management companies (AMCs). Even as the Nifty 50 has struggled this year, several AMC stocks have delivered solid gains, helped by a steady stream of money flowing into mutual funds.

Still, the sector is far from a one-way bet. Stocks such as Aditya Birla Sun Life AMC, Nippon Life India AMC and ICICI Prudential AMC have outperformed, while HDFC AMC, UTI AMC and Canara Robeco AMC have fallen behind. The gap reflects growing differences in how investors view each company's growth prospects, market share and valuation.

In 2026, despite the Nifty 50 falling 14%, Aditya Birla Sun Life AMC recorded a gain of 23.15%, Nippon Life India AMC rose by 18.91%, and ICICI Prudential AMC increased by 15.91%, defying the overall market trend. However, not all AMC companies have seen gains: HDFC AMC has fallen by 13.6%, UTI AMC by 21.8%, and Canara Robeco by 31.2%, underscoring the sector's lack of uniformity.

The main source of support for the industry remains comprised of inflows into Systematic Investment Plans (SIPs). Retail investors have maintained their practice of making regular monthly investments even amid market volatility, enabling AMCs to achieve earnings growth. Moreover, many fund houses are expanding their operations into portfolio management services (PMS) and alternative investment funds (AIFs), thereby providing additional revenue streams beyond those from traditional mutual funds.

Recently, Kotak Institutional Equities initiated its coverage on SBI AMC with a ‘buy’ rating and a fair value of ₹600. The brokerage, in its 29 September report, has also upgraded HDFC AMC’s stock recommendation to ‘buy’ following the recent correction, but downgraded Aditya Birla Sun Life AMC to ‘reduce’ following its outperformance over the past year.

SIP inflows industry's main earnings support

Also, the space could see a fresh entrant, with Sunil Singhania-led Abakkus Asset Manager filing draft papers for an initial public offering (IPO). While the listing is still some way off, it adds another dimension to the AMC story, as investors weigh the prospects of new entrants against the mixed performance of listed players.

Ashwani Shami, president and chief portfolio manager at Omniscience Capital, said the firm currently has AMC stocks in its portfolio, as it finds the better-quality names ‘pretty overvalued or at best, fairly priced’ and offer limited opportunity to generate alpha.

With corrections in some stocks, such as HDFC AMC, UTI AMC and Canara Robeco AMC, valuations have begun to cool, and investors may be better off taking a stock-selective approach where valuation comfort is evident, Shami said. While HDFC AMC could be facing an overhang from its parent bank, he feels that UTI AMC and Canara Robeco AMC have struggled to sustain market share amid competition from top-tier peers, weighing on their stock performance.

According to Sunny Agrawal, head of Fundamental Research at SBI Securities, HDFC AMC, ICICI Pru AMC and Nippon Asset Management look attractively valued at current levels.

Going ahead, investors should keep a close eye on three key metrics—SIP growth, margins stability and operating leverage—as these could determine the pace and quality of earnings growth for AMCs in the coming months, Agrawal said.

Over the past two years, flows have done most of the heavy lifting, said Raj Gaikar, an equity research analyst at SAMCO Securities. Market gains have added little, he said.

Assets Under Management (AUM) growth alone is no longer enough. An AMC earns a fee on its assets, so what it earns per rupee matters as much as the size of the book. That fee is under steady pressure, he explained.

“As schemes grow bigger, the fee rate steps down under the slab rules.”

Some large AMC stocks have cooled from the highs they hit earlier this year. Yet they are not cheap, highlighted Gaikar.

“The large listed names still trade at a clear premium to the broader market and to most other financial stocks. That premium has a sound base.”

Investors becoming selective on AMCs

These are asset-light firms with high margins, strong cash flows, steady payouts and very high return on equity. Monthly SIP flows also give them a level of earnings comfort that few sectors enjoy, he said. Having said that, he feels the concern is that current prices already assume steady, mid-teen profit growth for years. In a flat market, with new fee rules in place, that is a high bar.

AMC valuations currently appear fair to slightly rich, he said. Some names are priced for near-perfect delivery, while others offer more comfort, according to Gaikar.

Several market participants favour a selective approach, preferring to buy on dips. Going ahead, earnings growth, rather than rising valuations, is likely to drive market returns, some said.

According to Bloomberg data, Aditya Birla Sun Life Asset Management Co., Nippon Life India Asset Management and UTI Asset Management Co. are trading above their respective five-year average valuation multiples. In contrast, HDFC Asset Management Co., ICICI Prudential Asset Management Co., SBI Funds Management and Canara Robeco Asset Management are trading below their five-year averages, as shown in the chart.

Over time, rising markets have driven much of the growth in assets. Without that tailwind, growth would depend entirely on fresh inflows. The risk is investor fatigue: after two years of weak returns, a few more years of weak returns 0could trigger more SIP stoppages and fewer lump-sum investments. Falling fee yields would be the next pressure point. In strong markets, rapid AUM growth masks the decline. In flat markets, it hits revenue more visibly.

According to the Kotak report, “While large AMCs benefit from scale, established performance track record and stronger brands, recent performance moderation, intensifying competition from smaller AMCs and distributors’ preference for higher-commission products are key risks.”

• AMC stocks have outperformed despite broad market weakness and falling benchmarks.
• SIP inflows remain the primary driver of industry earnings growth.
• Valuations have eased, but many stocks still trade at premiums.
• Fee pressure could hurt profitability if market returns remain subdued.
• Stock selection matters more as performance diverges across listed AMCs.