Asset management companies recorded a double-digit jump in the June quarter, driven by core asset growth and an income boost from their own treasury investments.
Profit after tax rose 12-27% year-on-year in Q1FY27, aided by buoyant equity markets that lifted assets under management (AUMs) through mark-to-market gains.
The Nifty 50 gained 6.9% during the quarter, while the Nifty Midcap 150 and the Nifty Smallcap 250 surged 17% and 24%, respectively, boosting the value of mutual fund portfolios.
“Since AMCs earn fees based on AUM, the appreciation in market value increased their earnings. So, even if there were no fresh inflows, a rise in the value of assets would have increased AUM and, consequently, fee income,” Shrikant Chouhan, Head Equity Research, Kotak Securities.
ICICI Prudential AMC's net profit rose 23% on-year to ₹964 crore in Q1FY27. HDFC AMC's net profit grew 12% to ₹838 crore, while Nippon Life India AMC posted the fastest growth among the three, with profit rising 27% to ₹503 crore.
Other income boost
In the March quarter, treasury income for most AMCs was either in the red or significantly lower due to weak market conditions. With markets rebounding, treasury gains recovered in the June quarter, providing meaningful support to their bottom line.
“In the corresponding quarter last year (Q4FY26), many AMCs had losses in their other income, particularly from treasury investments. Since those losses are absent this year, the comparison looks stronger,” said Vinit Bolinjkar, head of equity research at Ventura Securities.
Nippon's other income stood at ₹170 crore in Q1FY27, up 17% on-year. It reported a loss of ₹33 crore in the previous quarter.
For HDFC AMC, other income stood at ₹262 crore, up 13% on-year and 23x sequentially.
For ICICI Prudential AMC, other income increased 23% on-year to ₹180 crore. It reported a loss of ₹89 crore in the previous quarter.
Brokerage firm Motilal Oswal, in a 22 July report, said Nippon Life India AMC and UTI AMC beat their PAT estimates only due to the one-off other income.
The boost from other income is also evident in core profit trends. On a sequential basis, while reported profit after tax (PAT) rose, core PAT—excluding the impact of other income—grew at a much slower pace, analysts said.
According to Equirus Securities, HDFC AMC’s PAT rose 34.5% sequentially. But its core PAT grew only by 3.5%. For Nippon AMC, PAT grew by 30.8% while core PAT fell by 9.3%. For ICICI AMC, PAT grew by 25.5% while core PAT fell by 0.7% on-quarter.
The numbers for Aditya Birla Sun Life AMC also show a similar picture. Its PAT increased surged 65.4% sequentially, but its core PAT fell by 13.7% in Q1FY27.
SIP flows
On a quarterly basis, SIP inflows moderated across AMCs. Nippon Life India AMC's SIP assets declined marginally to ₹31,800 crore in Q1FY27 from ₹32,100 crore in the previous quarter. At ICICI Prudential AMC, monthly inflows through SIPs and systematic transfer plans (STPs) fell to ₹4,872 crore from ₹5,104 crore, respectively, over the same period.