Racing ahead on equity edge—Can Canara Robeco AMC stay the course after IPO?

The IPO, which opens Thursday and closes Monday, comprises an offer-for-sale of up to 49.8 million equity shares by existing shareholders, priced in the band of ₹253–266 per share. The issue comes at a time when asset management companies (AMCs) are increasingly drawing investor attention, as markets scale highs and strong retail inflows through systematic investment plans (SIPs) provide steady momentum.

Leading charge

Founded in 1993 and rechristened in 2007 after Robeco acquired a 49% stake, Canara Robeco has transformed from a modest fund house into one of the fastest-growing players in India’s asset management industry. Besides managing domestic schemes, it provides investment advisory services on Indian equities to Robeco Hong Kong.

As of June 30, the fund house managed 26 schemes across equity (12), debt (10), and hybrid (4), with quarterly average assets under management (QAAUM) of about ₹1.1 trillion. In just two years, AUM surged 1.8 times from ₹625 billion in March 2023, while the equity book nearly doubled to over ₹1.03 trillion.

Its ability to scale rests on a dual advantage: the legacy distribution of Canara Bank’s nationwide 9,800-branch footprint and a 52,000-strong distributor base. The AMC has also emerged as a leader in mobilizing assets beyond the top 30 cities, ranking first among the top 10 AMCs and second in the top 20.

Racing past rivals

If growth is the measure of success, Canara Robeco has been lapping its listed peers. Over FY23–FY25, the AMC clocked a compound annual growth rate (CAGR) of 40.38% in revenues—far ahead of Nippon Life India Asset Management (28.07%) and HDFC AMC (27.05%).

The divergence is even sharper on the bottom line. Net profit growth stood at 55.49%, outpacing HDFC AMC (31.46%), Nippon Life (32.33%), Aditya Birla Sun Life AMC (25.11%), and UTI AMC (24.20%).

“We actually have a mix which is basically equity-focused. 91% of our AUM is in equity, which obviously is the higher-margin business in our industry. Given that we have such a high proportion of equity, and that this is not going to change very dramatically going forward, we are very confident that our profitability will remain on track in the years ahead," Rajnish Narula, managing director & chief executive, Canara Robeco AMC, told Mint.

The AMC has been “quietly and steadily building a strong foundation", according to Nikunj Saraf, chief executive officer, Choice Wealth. “CRAMC’s impressive performance revenue and profit CAGR reflects both execution excellence and favourable industry dynamics."

Equity edge at play

Beyond scale, Canara Robeco AMC stands out for profitability. It posted the highest three-year median return on equity (RoE) at 36.3%, well ahead of HDFC AMC (29.5%), Nippon Life (29%), Aditya Birla (27%), and UTI (17.1%). Operational efficiency has supported this, with the cost-to-income ratio, which compares a company’s operating expenses to its operating income, improving from 47.7% in FY23 to 36.2% in FY25, and further to 34.2% in Q1FY26.

The edge comes from its sharp equity tilt: 91.66% of AUM is equity-oriented, versus 61.29% at HDFC AMC and just 38.96% at UTI. Analysts see this as both a strength and a risk.

“Strong RoE, efficient cost structures, and tech-led distribution add confidence, though cyclicality and compliance risks remain," said Bhavik Joshi, research analyst at INVASSET PMS.

SimranJeet Singh Bhatia, senior research analyst, Almondz Group, noted that a low cost-to-income ratio provides scope for reinvestment, while Canara Bank’s branch network can aid expansion into under-penetrated regions. Saraf of Choice Wealth added that the equity-heavy model positions the AMC to benefit from India’s growth, though geographic concentration—over 60% AUM from five states—underscores the need to deepen presence beyond top 30 cities, which are expanding at a 24% CAGR.

Also read LG Electronics India IPO: Lower valuation, strong profits—will investors bite?

Concentrated geography

Geographic reliance is a visible weak spot. In FY25, Maharashtra alone contributed 31.7% of CRAMC’s revenues, while the top five states — Maharashtra, Karnataka, Gujarat, Delhi, and Tamil Nadu — dominated the business mix. Such dependence exposes the AMC to regional economic slowdowns and limits its diversification.

This is, however, a sector-wide issue. The Securities and Exchange Board of India’s 2025 Investor Survey — which covered 90,000 households across 400 cities and 1,000 villages — revealed that mutual fund penetration in India remains heavily skewed and limited. States such as Delhi (20.7%) and Gujarat (15.4%) show high participation, while rural areas lag at just 6%. The survey also found that while 53% of households are aware of mutual funds and exchange-traded funds, this awareness is not translating into higher penetration as only 6.7% currently hold investments in them — underscoring how adoption remains low and is clustered in select geographies.

Narula acknowledged the imbalance, but sees an opportunity: “About 24% of our AUM comes from B30 cities, compared with 18% for the industry, giving us an edge in under-penetrated markets."

According to Joshi, expansion will hinge on Canara Bank’s branch network, activating independent financial advisors (IFAs) in tier-2/3 cities, and scaling digital onboarding. With 25+ branches and 52,000 partners, execution will depend on distributor engagement and service quality.

Regulatory overhang

CRAMC’s growth story carries a regulatory overhang. On June 28, Canara Robeco Mutual Fund received a GST show-cause-cum-demand notice alleging incorrect tax treatment for FY2018–19 to FY2022–23, with a disputed demand of ₹476.28 crore.

The management has clarified that the notice pertains to the mutual fund, not the AMC. “Our GST accounting is in line with industry practice, so we are confident about this notice," said Narula.

Analysts see limited risk. “The company has not made any provision, suggesting management does not expect a major outflow," said Bhatia of Almondz. Saraf of Choice Wealth added that while provisioning details remain undisclosed, the IPO will unlock ₹684 crore for Canara Bank and boost visibility for the AMC.

Growth runway

India’s mutual fund industry is set for robust growth, with AUM projected to expand at 16–18% CAGR between FY25 and FY30, more than doubling from ₹67 trillion to ₹147–155 trillion. This builds on the 18% CAGR achieved over FY20–25.

Despite the momentum, penetration remains shallow. As of Q3CY24, mutual fund AUM was just 20% of India’s GDP, compared with 21% in China, 50% in South Africa, 55% in Japan, 59% in the UK, 64% globally, 81% in France, and 124% in the US.

“The sustainability of this outperformance rests on India’s robust mutual fund expansion, with industry AUM projected to reach ₹130 lakh crore by FY30 at an 18.6% CAGR," said Saraf.