Newly listed SBI unit gets 'buy' ratings from three analysts for up to 28% upside; Check price targets

Shares of SBI Funds Management Ltd. gained on Monday, August 31, after three brokerages, BofA Securities, HSBC and Motilal Oswal Financial Services, initiated coverage on the asset management company with "Buy" recommendations.



BofA Securities initiated coverage with a "Buy" rating and a target price of ₹685 per share, implying an upside of around 21.5% from Friday's closing price of ₹563.80.

The brokerage sees upside for the stock from a combination of structural growth, distribution strength and improving profitability. It said SBI Funds' leadership in B-30 markets positions it well to benefit from the next leg of retail participation in India's equity markets.

BofA also highlighted the company's low-cost platform and strong operating leverage, while expecting blended yields to improve as equity penetration rises and alternative assets scale up.

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HSBC On SBI Funds

HSBC also initiated coverage on SBI Funds with a "Buy" rating and a target price of ₹660, implying an upside of around 17% from Friday's close.

The brokerage expects SBI Funds' strong distribution capabilities to help mitigate pressure from market share losses in assets under management (AUM). It also expects improved yield management, a larger non-mutual fund AUM base and operating leverage to strengthen profitability.

HSBC expects SBI Funds' Earnings Per Share (EPS) to grow at a Compounded Annual Growth Rate (CAGR) of 17% over financial year 2026-2029.

Motilal Oswal Sees 28% Upside

Motilal Oswal Financial Services initiated coverage with a "Buy" rating and a target price of ₹720 per share, implying an upside of around 28% from Friday's close of ₹563.80.

The brokerage described SBI Funds as a high-quality, structurally compounding asset management franchise, supported by its market leadership, SBI-backed distribution network, an underpenetrated mutual fund industry and strong operating leverage.

Motilal Oswal expects the company's mutual fund AUM to grow at a 13% CAGR over FY26-28, with improving yields and a rising contribution from alternative businesses driving a 14% revenue CAGR.

It expects PAT to grow at around 16% CAGR over the same period, with return on equity projected at 51-52%. The brokerage expects SBI Funds' EBITDA margin to improve to around 81% by FY28, from 79% in FY26, aided by operating leverage.

Motilal Oswal's bull case scenario for SBI Funds implies a 51% upside potential from current levels, as it ascribes a price target of ₹850 for the newly listed stock.

SBI Funds share price

Shares of SBI Funds Management rose as much as 2% on Monday and are currently trading around 1.4% higher at ₹571.55. The stock continues to trade around its IPO price of ₹574.