SBI Funds Management Projected to Grow at 14 Per Cent Revenue CAGR Till FY29, Brokerage Outlook Shows

SBI Funds Management (SBI FM), the country's largest asset management company (AMC), manages ₹12.5 lakh crore in mutual fund assets. Market analysts point to several key differentiators for the firm, including its exclusive association with the largest public sector bank, market leadership in faster-growing lower-tier markets, a well-diversified scheme mix, and institutional scale.

State Bank of India (SBI) accounts for 35 per cent of SBI FM’s equity assets under management (AUM). According to market analysis, the parent bank offers three distinct advantages to the AMC: expansion opportunities, as the average mutual fund AUM per SBI branch is currently only 10 per cent of its retail deposits; lower distribution costs; and strong customer affinity for SBI schemes, which helps mitigate performance-related growth risks.

The asset manager's scheme performance has shown improvement, with two to five schemes placed within top tiers in CY25 and CY26, compared to just one in CY24. Mutual fund average assets under management (AAUM) are expected to grow by 13 per cent between FY26 and FY29. Combined with stable yields, this expansion is projected to translate into a 14 per cent revenue compound annual growth rate (CAGR) up to FY29.

Operating profit is expected to grow at a 15 per cent CAGR through FY29, primarily driven by operating leverage. The firm's large scale allows it to operate at a lower operating expense ratio compared to industry peers. However, profit after tax (PAT) growth is anticipated to be slightly slower at a 13 per cent CAGR, following a 30 per cent year-on-year decline in investment assets in FY26 due to a one-time interim special dividend of ₹3,560 crore.

Currently, SBI FM is trading at 37x September 2027 estimated operating profit after tax (OPAT), representing a 5 per cent discount to HDFC AMC and a 10 to 20 per cent discount to ICICI AMC and Nippon Life India Asset Management (NAM). The target price of ₹710 is anchored on a multiple of 40x September 2028 estimated OPAT, aligning with HDFC AMC's multiple on the basis of a similar earnings growth profile.

"SBI Funds Management demonstrates how institutional scale and a strong parent banking network can create deep structural advantages in the financial services sector. Leveraging existing branch networks to bridge the gap between retail deposits and mutual fund penetration offers a clear blueprint for sustainable distribution efficiency. While one-off capital distributions temporarily impact profit after tax growth, the underlying operating leverage and steady revenue expansion position the AMC firmly within the upper tier of the market." — Dr. Shishir Gupta, Founder & CEO, StartupLanes