Kotak initiated coverage with a ‘Buy’ rating on SBI Funds Management and a price target of ₹600 per share.
The brokerage upgraded HDFC AMC to ‘Buy’ from ‘Add’ earlier, while retaining a price target of ₹2,800 per share.
Kotak downgraded ABSL AMC to ‘Reduce’ from ‘Add’ earlier, with a price target of ₹1,010 per share.
While large AMCs benefit from scale, established performance track records and stronger brands, recent moderation in performance, intensifying competition from smaller AMCs and distributors’ preference for higher-commission products are key risks, according to Kotak.
Over the medium term, a benign regulatory environment and sticky systematic investment plan (SIP) flows could provide support. However, AMCs will need to invest in alternative and offshore offerings, as well as distribution, while managing rising pressure to retain talent, the brokerage said.
Sector valuations have corrected but remain elevated compared with broader markets, making a recovery in the broader market important for further upside, according to Kotak.