Aditya Birla Sun Life AMC Q2 FY27 Earnings Call: AUM Crosses Rs. 11 Lakh Crore, PAT Slips Despite Higher Revenue (ABSLAMC)

Revenue Up, PAT Down YoY Despite AUM Milestone

• Q2 FY27 revenue of Rs.526 Cr — up from Rs.506 Cr in Q2 FY26, but PBT fell to Rs.296 Cr (vs Rs.316 Cr) and PAT to Rs.221 Cr (vs Rs.241 Cr); PAT declined YoY despite higher revenue.
• H1 FY27 revenue of Rs.1,152 Cr — vs Rs.1,072 Cr in H1 FY26; H1 PBT Rs.702 Cr (vs Rs.688 Cr) and H1 PAT Rs.530 Cr (vs Rs.518 Cr).
• Overall average AUM crossed Rs.11 lakh crore — Rs.11.06 lakh crore in Q2 FY27 including alternate assets (ESIC and EPFO mandate money), up 140% YoY.
• MF QAAUM of Rs.4.42 lakh crore (+4% YoY) — equity MF QAAUM ~Rs.2.09 lakh crore (+9% YoY), with equity mix at 47.4% in Q2 FY27.
• Segment yields in Q2 FY27 — equity ~63-64 bps, hybrid ~24-25 bps, liquid 12-13 bps, ETF ~8 bps; alternates gross yield improved to ~7.4% (vs 7.1% in Q1 FY27), net 4.3% (vs 4.0%).

Supportive Macro, Industry AUM +13% YoY

• IMF raised its FY27 India growth forecast from 6.4% to 7% — management cited this alongside RBI revising its FY27 growth outlook upwards to 7.1%.
• RBI raised the repo rate by 25 bps to 5.5% in the October policy while signaling a more cautious inflation stance; forex reserves over $730 billion support external sector resilience.
• Industry quarterly average AUM of Rs.87.21 lakh crore as of 30 Sep 2026 vs Rs.77.13 lakh crore YoY (+13%); Sep 2026 industry SIP contribution Rs.32,490 crore (+11% YoY); total industry folios 30 crore (+17% YoY).
• B30 average AUM of Rs.16.37 lakh crore — 18.8% of total industry AUM, +13% YoY; individual average AUM Rs.23.24 lakh crore (~61% of total); Q2 FY27 industry NFO collections ~Rs.11,504 crore.
• Management assumes industry growth momentum remains intact in FY 2026-2027 — SIPs as the permanent gateway; bank deposit rates have not risen despite bond yields, as FCNR inflows keep banking-system liquidity ample.

Broad-Based Flow Improvement, Retention Ratio Jumps

• SIP AUM of ~Rs.86,000 Cr as of September 2026 — Sep 2026 SIP contribution Rs.1,095 crore via 41.7 lakh SIP-contributing folios; ~7.05 lakh new SIP registrations in Q2 FY27; total folios 1.14 crore (+6% YoY).
• ~55-56% of SIP count is digital — but digital contributes only 18-20% by value due to lower ticket sizes; MFDs, banks and national distributors drive the rest; management is actively pushing to accelerate improving QoQ flow growth.
• 75-80% of funds rank in Q1/Q2 of the peer group — 85% sit between benchmark and peer group on a 1-year basis; improvement extended to the 3-year horizon with 70% in Q1/Q2.
• Flexi Cap net flows market share improved to ~4.5-4.8% in Q2 FY27 — from a lower level in Q1 FY27, against ~3-3.5% AUM market share (CEO A. Balasubramanian).
• Balanced Advantage posted positive inflows in Q2 FY27 — while the category industry-wide has not been receiving significant flows; management attributed this to improved performance and possible allocation shifts.
• Redemption retention ratio improved to 25-30% (per Rs.100 Cr redeemed) vs 4-5% historically — strategy includes encouraging switches into other ABSL funds rather than outright exits; outflows persisted in the ALSS scheme (along with the industry) and to some extent in large cap.
• Channel mix: ~52% MFDs, ~20% national distributors, ~10% banks, ~18% direct — 4-5 banks added products to recommendation lists in Q2 FY27, including the largest private sector bank.

EPFO/ESIC Wins Are Cost-Neutral; Alternates and GIFT City Build-Out

• EPFO and ESIC mandate economics are expense-neutral — CFO Pradeep Sharma said yields "cover only whatever additional expense the company needs to incur"; a dedicated team will be required but existing resources will be deployed.
• Management sees a "rub-off effect" from the mandate wins — added credibility with other mandate outsourcers, PSUs and future global mandates; over time, if regulations permit, the mandates could add a few basis points to profit (period unspecified).
• PMS/AIF assets rose from Rs.30,300 Cr — to Rs.6,50,000 crore (includes the EPFO mandate); real estate AUM ~Rs.60 crore (+43% YoY), with fundraising underway for Aditya Birla Real Estate Credit Opportunities Fund Series 2 (senior secured lending to post-approval brownfield projects in Tier 1 cities).
• Industry-wide SIF AUM reached ~Rs.31,000 crore within ~6-9 months of category launch (as of Q2 FY27); ABSL AMC deliberately avoided first-mover status and built a 3-member options/F&O team; its hybrid long-short fund ranked among top performers over the last 6 months of FY 2026-2027.
• SIF yields sit between debt and equity categories — CEO noted higher-end SIF categories could see margins closer to equity funds, while a fixed income/credit SIF could yield ~55-60 bps (period unspecified).
• GIFT City: 2 products active — emerging markets fund relaunched (outward remittance under LRS) and India Growth Fund (fund of funds, inward remittance); management plans to launch six funds across retail and non-retail categories in Q3 FY27.
• Passive QAAUM of ~Rs.13,890 crore (+10% YoY) — "Birla Passive" launched as a dedicated brand; first in India to launch BSE Total Market Cap Index Fund and ETF; ETF QAAUM grew 42% YoY vs industry growth of 27%.

Employee Cost Bridge Explained; FY27 Cost Guidance Anchored to Q2 Run-Rate

• Q2 FY27 employee expense growth driven by three counts — per CFO Pradeep Sharma: ESOP cost of Rs.12-13 Cr (~13% of the increase; vs ~Rs.10 Cr in Q1 FY27), a one-time Rs.6 Cr old-provision reversal embedded in FY 2025-2026 prior-year numbers (~6% of the visible increase), and normal increments plus added headcount including the newly built passive team.
• New ESOP scheme (Oct 2026) estimated to add ~Rs.14-15 Cr per annum — ~Rs.3-3.5 Cr per quarter; existing ongoing schemes carry ~Rs.55-60 Cr annual impact; CFO confirmed the combined run-rate applies for FY 2026-2027 and FY 2027-2028.
• Employee expenses expected to remain in a range similar to Q2 FY27 — in the coming quarters of FY 2026-2027; overall FY 2026-2027 costs expected in line with the Q2 run-rate with only inflationary increases, with the higher Q2 ESOP cost already factored in.
• Treasury investment book of Rs.3,800-3,890 Cr — deployed largely in debt mutual funds and corporate bonds; equity schemes account for ~17-18% of the book, in line with the company's consistent investment policy.
• Direct channel flagged as a gap — an analyst (PL Capital) noted direct share in equity at ~18%, among the lowest vs peers (Q2 FY27); management acknowledged it as a focus area, citing an ~80-person direct team across 14 locations and client segmentation (>Rs.1 Cr via service-to-sales teams, Rs.25 lakh-Rs.1 Cr via a dedicated team, plus virtual RM/AI chatbot).
• Growth vs profitability balance — management will pursue aggressive sales momentum in select products but stated incremental growth is not expected to come at the cost of overall profitability; costs to be kept calibrated on a continuous basis.

Product Pipeline Fills Category Gaps; Volatility Caveat on Outlook

• Real Estate Credit Opportunity Fund Series 2 targeted to close by December (FY 2026-2027) — currently in fundraising; a total market index fund/ETF and an open-ended financial services sectoral debt fund have been launched and are being promoted aggressively.
• One product filed with SEBI — management plans to launch one or two open-ended equity products, including a life cycle fund, to fill identified category gaps versus competition (period unspecified).
• Core/focus funds receive 60-70% of allocations — incremental flows are improving; management expects continued basis-point performance gains to ultimately convert into larger flow share (period unspecified).
• Management expects reallocation across categories — from areas that received significant inflows over the last 2-3 years, with widening acknowledgement among distribution partners of Birla's improved performance; products are on recommended lists of ~32 channels.
• Near-term volatility may persist — per management, but earnings growth and a growing domestic investor base provide a strong foundation for the longer-term outlook; deepening B30 reach remains a stated strategic priority.