SBI AMC has priced its IPO at ₹575, which has resulted in unlisted investors facing a loss of about 30% over the last month. So, what should unlisted investors do now? Here are some numbers that explain why SBI AMC is coming at this price.
If you look at SBI AMC’s valuation through the lens of Price-to-Earnings (P/E), SBI AMC is trading at about 38x, while ICICI AMC is trading at 49x, HDFC AMC at 41x, and Nippon AMC at 51x. This means SBI AMC is trading at a discount of about 22% to ICICI AMC, 7% to HDFC AMC, and 25% to Nippon AMC. So, looking only at the P/E multiple, SBI AMC appears to be clearly undervalued compared to its peers. However, we should also look from another angle to understand the real reason behind the IPO pricing.
What Does Revenue Growth Tell Us?
SBI AMC has delivered a 28% revenue CAGR over the last three years, while ICICI AMC has delivered about 31%, HDFC AMC about 26%, and Nippon AMC about 28%. Looking at revenue growth, SBI AMC is growing fairly in line with its competitors. But let’s now look at the QAAUM growth rate.
SBI AMC has delivered around 17% QAAUM growth over the last three years, while ICICI AMC has grown at 27%, HDFC AMC at 23%, and Nippon AMC at 30%. So, in terms of QAAUM growth, SBI AMC is clearly behind its peers.
Now look at the key metric—Revenue Yield (Revenue ÷ AUM), which is one of the most important metrics for an AMC.
SBI AMC has a Revenue Yield of 0.35%, while ICICI AMC has 0.52%, HDFC AMC has 0.44%, and Nippon AMC has 0.37%. So, SBI AMC clearly has the lowest Revenue Yield compared to its peers. Now let’s look at another important metric.
Operating Yield (Operating Profit ÷ AUM) (EBITDA to Assets)
SBI AMC has an Operating Yield of 0.27%, while ICICI AMC has 0.38%, HDFC AMC has 0.35%, and Nippon AMC has 0.24%. This means SBI AMC has the second-lowest Operating Yield among its peers.
So, SBI AMC has the lowest Revenue Yield and the second-lowest Operating Yield compared to its peers.
Why Does SBI AMC Have a Low Yield?
The reason is simple: Passive Funds.
SBI AMC has an AUM of about ₹12 lakh crore. Out of this, nearly ₹4 lakh crore is in passive funds, which means passive funds account for around 32% of its total AUM. In comparison, ICICI AMC has only 17% of its AUM in passive funds, HDFC AMC has 9%, and Nippon AMC has 36%. This is why SBI AMC has the largest market share in passive funds at around 28%, compared with ICICI AMC at 12%, HDFC AMC at 6%, and Nippon AMC at 18%.
This is the reason why SBI AMC has the lowest Revenue Yield. Also, when we look at the Operating Yield as a percentage of AUM excluding passive funds, the yield increases to around 0.37%, which is almost the same as its competitors. This shows that SBI AMC has a business mix issue, not an execution issue.
Why Is SBI AMC More Focused on Passive Funds?
The answer lies in regulatory pressure.
SEBI is actively pushing passive investing while reducing TER limits. That means structural yield pressure is likely to continue across the industry. Scale can improve profits and efficiency, but it cannot bring passive fund yields back to the levels of active funds.
So, What Should Unlisted Investors Do? Look at the PEG Ratio.
If SBI AMC trades at a PEG ratio of 1.91, which is higher than HDFC AMC (1.57) and Nippon AMC (1.80), it suggests that even after the correction, SBI AMC is not necessarily cheaper when growth is taken into account. While the P/E multiple looks attractive, the slower growth results in a higher PEG ratio than some of its peers.
Also, the unlisted share price has already corrected from ₹825 to ₹575, a decline of around 30% before the IPO. Much of the valuation reset has already happened. Going forward, investors should focus more on whether SBI AMC Unlisted Shares can improve its growth trajectory rather than simply relying on a lower P/E multiple.
Final Thoughts
SBI AMC is undoubtedly a high-quality business with a strong brand, a dominant passive market share, and a long growth runway. However, with structural yield pressure, slower AUM growth, and a limited margin of safety at 38x earnings, I don’t think the risk-reward is attractive enough at the IPO price.
For unlisted investors, the long-term story remains strong. With its scale of operations, SBI AMC can continue improving profitability over time. However, its yield is likely to remain lower because of its larger passive fund mix. The business quality is not in question—the challenge is balancing valuation with future growth.