ICICI Prudential AMC shares fall 2% after cost-led earnings miss; analysts stay bullish
AI Summary
ICICI Prudential Asset Management Company's shares fell 2.11% to ₹3,138.10 after reporting a quarterly earnings miss due to rising employee costs, despite a year-on-year profit increase of 23%. Brokerages remain optimistic, with Motilal Oswal and Equirus Securities maintaining buy ratings and target prices suggesting potential upside. The company also reported strong growth in mutual fund AUM and stable revenue yields, indicating solid operational performance.
Shares of ICICI Prudential Asset Management Company fell in early trade on Tuesday, declining 2.11 per cent to ₹3,138.10 on the NSE as of 10.34 am, after the fund house reported a cost-driven miss on quarterly earnings. The stock opened at ₹3,251.10, touched a high of ₹3,287.70, and slid to a low of ₹3,090.70 in the session so far, with sell orders outpacing buys — 63.84 per cent of the order book sitting on the sell side.
Despite the price pressure, brokerages have broadly maintained their constructive stance on the stock. Motilal Oswal has a Buy rating with a target price of ₹3,800, implying upside of around 19 per cent from the previous close of ₹3,205.60. Equirus Securities upgraded its rating to Long from Add, with a March 2027 target of ₹3,620. JM Financial maintained its Add rating with a target of ₹3,600, while all three firms noted they were not making material changes to earnings estimates.
The earnings miss that triggered the selling was driven by a sharp sequential jump in employee costs. ICICI Prudential AMC reported a Q1FY27 profit after tax of ₹9.65 billion, up 23 per cent year-on-year but below street estimates of around ₹10.25 billion. Employee expenses rose 11 per cent year-on-year and 45 per cent quarter-on-quarter to ₹2.04 billion, driven by ESOP costs accruing from this quarter and a reversal of provisions in the prior quarter. Management indicated the quarterly run-rate going forward would be in line with Q1FY27 levels, with total ESOP costs of ₹1.25–1.30 billion spread over three years.
On the operational side, total mutual fund quarterly average AUM grew 18 per cent year-on-year to ₹11.17 trillion, with the company retaining the highest market share in actively managed funds at 13.5 per cent. Revenue from operations rose 17.6 per cent year-on-year to ₹15.64 billion, while blended MF revenue yield held broadly flat at 46.7 basis points. Management also confirmed no earnings impact from SEBI’s recent expense ratio revisions, as the reduction is passed on to distributors.
Original Article
Published on Hindu BusinessLine