'Buy' ICICI Prudential AMC shares for 34% upside, Equirus Securities issues bullish call

Equirus Securities has initiated coverage on ICICI Prudential Asset Management Company (AMC) with a 'Long' rating, and a price target of ₹2,900 per share, which implied a potential upside of 34% from the issue price.

The coverage initiation came on Thursday, a day before the second-most bid IPO of 2025 made its stock market debut.

ICICI Prudential AMC shares listed on the bourses at ₹2,600, a 20% premium compared to its issue price of ₹2,165. The three-day IPO had received bids worth ₹3 lakh crore.

The Indian mutual fund industry has witnessed strong growth over the last five years. Industry revenue has grown at a compound annual growth rate (CAGR) of 16%, earnings before interest, tax, depreciation and amortisation (EBITDA) have risen at 19%, and profit after tax (PAT) has increased at 23%.

Industry PAT crossed ₹15,000 crore in financial year 2025. This is equivalent to 23 basis points of average quarterly average AMC. ICICI Prudential AMC is the most profitable player in the industry, with the highest PAT market share of 17.4% in FY25.

From a business mix perspective, ICICI Prudential AMC is India's largest equity focused AMC, with a 13.4% share of equity AMC. This leadership is supported by consistent scheme performance, a sales force of over 2,900 people, and deep penetration across retail and high net worth individual segments.

Equity AMC have grown at a CAGR of 27% since FY15. This has helped the company maintain a higher yielding product mix and strengthen its long term competitive position.

In addition to its MF business, the company has rapidly scaled up its non MF businesses, which now contribute around 15% of total revenues. These businesses generate yields of more than 120 bps, which further improves blended profitability.

Backed by an asset light operating model, ICICI Prudential AMC delivers industry leading profitability, with EBITDA margins of over 70%, profit after tax margins of more than 50%, and return on equity in the range of 70 to 80%.

The brokerage expects revenue and PAT to grow at a CAGR of 16% between FY25 and FY28. This growth is expected to be driven by strong expansion in MF and alternate AMC.

At the upper end of the price band, ICICI Prudential AMC trades at financial year 2027 estimated Earnings Per Share (EPS) of 30 times, which implies a discount of 10% to 15% to HDFC AMC, Equirus said, calling them attractive.

Earlier on Wednesday, PL Capital, part of the Prabhudas Lilladher Group, had initiated coverage on the stock. PL Capital expects up to a 40% upside from its issue price. It has initiated coverage with a 'Buy' rating and a price target of ₹3,000.

The brokerage cited the company's dominant position in the asset management space, backed by strong fundamentals, as the key reason for its positive stance.

Shares of ICICI Prudential AMC are currently trading 21% higher at ₹2,617.

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