Asset management companies (AMCs) largely held up their full-year earnings performance in FY26, but mark-to-market losses stemming from the West Asia conflict dented their latest quarterly profit. Listed AMCs recorded a sequential decrease in net profit or a loss in the January-March quarter.
ICICI Prudential AMC reported a 16.8% quarter-on-quarter (QoQ) decline in net profit to ₹763 crore in Q4. HDFC AMC’s net profit fell 19% to ₹623 crore, while Nippon India AMC’s earnings declined 5% to ₹384 crore and Aditya Birla Sun Life AMC reported a 31% drop in net profit. UTI AMC swung to a loss of ₹51 crore from a profit in the preceding quarter.
Analysts said earnings were not impacted by management fees, which are linked to the assets that AMCs manage. A fall in assets under management leads to lower income for mutual funds. However, the average assets of mutual funds during the January-to-March quarter were more or less stagnant, which means the drop in profit was not necessarily due to lower fees, analysts said.
Revenue for AMCs depends on quarterly average assets, which stayed largely flat because the market correction happened in March, so fee income remained steady, said Abhinav Tiwari, a research analyst at Bonanza.
“The real impact came from other income, where AMCs invest their own money. As the markets fell sharply in the March quarter end, these portfolios saw losses, dragging down reported profits,” Tiwari said.
The AMCs acknowledged that mark-to-market losses impacted their other income.
"Our Q4FY26 profit after tax was at ₹187 crore as compared to ₹228 crore,” A. Balasubramanian, MD and CEO at Aditya Birla Sun Life, told investors on a call on 29 April. This, he added, was on account of a reduction in other income due to mark-to-market actions for the quarter.
Other income drop
"We have recorded a negative other income of ₹0.89 billion for the quarter ended March 2026 due to the mark-to-market impact," Naveen Agarwal, CFO at ICICI Prudential AMC, said on its investor call on 13 April.
"Other income stood at negative at ₹0.34 bn, lower for both YoY and QoQ due to market volatility,” Parag Joglekar, CFO at Nippon India AMC, said on a call with investors on 27 April.
So, although AMCs earned relatively stable fees linked to their quarterly assets, their own investments took a hit in March, when stocks declined sharply and there was a mark-to-market loss.
Geopolitical tensions arising from the West Asia conflict resulted in a selloff in the global and India stock markets. The war started on 28 February and the Nifty 50 index lost more than 11% by 30 March.
ICICI Prudential AMC’s quarterly average assets grew 2.6% sequentially. For HDFC AMC and Nippon India AMC, this growth was 0.2% and 3.4%, respectively. Aditya Birla Sun Life AMC’s quarterly average assets fell by 1.64%, while for UTI AMC, the number fell by 1.3%.
Barring HDFC, all AMCs reported losses in their treasury books due to weaker markets during the quarter, Equirus Securities said in a report dated April 30.
During FY26, profit after tax at ICICI Prudential AMC increased 24%. Earnings climbed 16% for HDFC AMC and 19% for Nippon India AMC. It fell 5% for Aditya Birla Sun Life AMC. UTI AMC, on the other hand, reported a 74% drop in net profit for FY26.
The next pain point for AMCs could be the change in expense ratio structures, effective 1 April. The Securities and Exchange Board of India removed statutory levies from the TER, lowering the fees that AMCs can charge investors.
TER impact
On the total expense ratio (TER) regulations, listed AMCs indicate a gross impact of 3-4 basis points, Equirus Securities said. Scheme-level impact may vary as there will be pressure on larger schemes while some smaller schemes may benefit, but the overall effect on AMCs is expected to be neutral, Equirus Securities added.
“The AMC business has high operating leverage with costs largely fixed, especially after distribution expenses,” said Alok Agarwal, head of quant and fund manager at Alchemy Capital Management. “As assets grow, revenues increase but costs don’t rise proportionately. In our view, even with some changes in TER across the industry, the sector still has a strong growth runway.”
An ongoing shift toward passive products, for which AMCs charge investors 6-25 bps versus 53-75 bps for active funds, will continue to put pressure on blended yields, said Tiwari of Bonanza. Passive schemes were at ₹14.12 trillion at the end of March, making for 19% of total mutual funds, according to the Association of Mutual Funds of India.
The business also remains highly dependent on the equity markets, where even a 10% correction can impact both AUM-linked revenue and treasury income, Tiwari added.