SBI Funds Management shares fell to a record low of ₹433.55 on Monday after the asset manager posted a second-quarter profit of ₹701 crore, missing analyst targets. The 6% year-on-year profit decline was driven by a 24.3% spike in operating expenses. With the stock now trading 24% below its issue price, investors are focusing on the firm's ability to maintain its market share in a competitive industry.
SBI Funds Management saw its share price drop 7% to a record low of ₹433.55 on Monday. This decline followed the company’s second-quarter earnings report, which failed to meet the expectations of market analysts. The stock is currently trading 24% below its issue price of ₹574, reflecting investor concern over the company’s recent performance.
The firm reported a profit after tax of ₹701 crore for the quarter, marking a 6% decline compared to the same period last year. This figure was lower than the ₹766 crore profit that analysts had expected. A major factor behind this shortfall was a 24.3% increase in operating expenses, which highlights that the costs required to run and expand the business have risen sharply.
Beyond profit numbers, the company's growth metrics have also drawn attention. In the September quarter, the firm’s quarterly average assets under management in the equity category grew by 5.6%. This pace was slower than the 6.6% growth seen across the broader mutual fund industry. Consequently, the company saw its market share contract by 12 basis points, bringing it to 12.53%. Additionally, its share in new systematic investment plan additions fell to 9.94%, down from 10.6% in the previous quarter. These figures suggest that the company is finding it harder to capture new investor inflows at the same rate as the rest of the industry.
Despite the current selling pressure, some brokerage houses remain optimistic about the long-term outlook for the company, which is a joint venture between the State Bank of India and Amundi. Equirus Securities has maintained a long rating with a target price of ₹540, while Motilal Oswal Financial Services keeps a buy rating with a target of ₹590. These views are based on the firm's established distribution network and its entry into alternative investment products. However, the immediate market reaction has been driven by earnings volatility, with 2.52 million shares traded across the National Stock Exchange and Bombay Stock Exchange by midday.
Moving forward, investors will be monitoring whether the company can control its rising operating expenses and stabilize its market share. The ability to attract new systematic investment plan inflows and improve asset growth relative to industry peers will be the key areas for shareholders to track in the coming quarters.