Mutual fund boom: Your SIPs are powering the rally in these 4 multibagger stocks

Economic Times

4 days ago

Indian mutual fund industry's AUM has doubled in 3 years, fueling multibagger returns for AMC stocks like Shriram AMC, HDFC AMC, and Nippon India. SIP inflows remain strong, reaching record highs, driven by increasing retail participation and financialization of savings. Experts recommend HDFC AMC, Nippon India AMC, and KFinTech, citing growth potential and steady inflows.
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While some investors are making money by doing SIPs in mutual funds, others are making smart investments in shares of asset management companies (AMC), 3 of which have more than doubled money in the last 3 years. Even shares of MF distributor Prudent Corporate Advisory have become a four-bagger.With mutual funds becoming the top choice for investing as far as households in India are concerned amid rising financialization of savings, shares of AMCs have turned into wealth creators for savvy investors who backed the sector early.In the last 3 years, 3 AMC stocks HDFC AMC and Nippon India - have given multibagger returns. The other two - ABSL and UTI AMC - have also given fantastic returns. MF distributor Prudent Corporate Advisory shares are up 321%.Over the 3-year period, Shriram AMC has delivered stellar 239% returns, followed by HDFC AMC at 180% and Nippon at 160%. ABSL gained 93% in three years but doubled in two years, while UTI AMC posted 77% gains. MF distributor Prudent Corporate Advisory has surged 328% in the same period.The total assets under management (AUM) of the Indian mutual fund industry has itself doubled in the last 3 years to over Rs 75 lakh crore. Last month, equity funds recorded the highest-ever monthly inflows, totalling Rs 42,702 crore, and saw consistent inflows for the 53rd consecutive month in July 2025 starting from March 2021.Reflecting the structural growth story in mutual funds, SIP money has been consistent, despite small dips, even during market downturns. SIPs recorded a new high in monthly contributions yet again in July, with total contribution amount reaching Rs 28,464 crore in July.'The Indian Asset Management Company (AMC) sector is strategically positioned for sustained expansion, attributable to escalating mutual fund participation nationwide, increasing Systematic Investment Plan (SIP) contributions, and the robust financial stability of leading AMC firms. For investors aiming to engage with India's expanding wealth management industry, AMC stocks present attractive medium- to long-term opportunities, while also considering potential market and regulatory risks,' Vipul Bhowar, Senior Director - Listed Investments, Waterfield Advisors, told ET Markets.While valuations have climbed quickly following recent market rallies, creating a sense of cautious optimism, he said all top AMCs are viewed as favourable options due to their strong growth potential.'However, it's worth noting that current valuation multiples seem a bit higher than usual, so it's wise to choose the right moment to enter these businesses carefully,' he said.For domestic brokerage firm Nuvama, top picks in the sector are HDFC AMC (Target price: Rs 6,530), Nippon India AMC (Rs 1,010) and KFinTech (Target price: Rs 1,540). 'We reckon AMCs and RTAs shall report a recovery in QoQ earnings growth driven by steady inflows led by SIPs and stable equity markets,' the brokerage said in a note.Motilal Oswal has a buy call on Nippon with a target price of Rs 930, premised on 34x FY27E earnings.'Nippon commands the industry's largest retail investor base, with 21.2 million unique investors (representing over one in three mutual fund investors) as of Jun'25. Overall, NAM's mutual fund segment performance reflects its focused strategy on scaling retail participation, driving product innovation, and enhancing operational intensity, positioning it as a credible compounding franchise in the Indian asset management industry,' it said.Meghna Luthra of InCred Equities expects the inflow momentum to pick up pace further in the near term and sustain the healthy level in the medium term led by higher participation from the retail segment, higher understanding of market volatility and rising investment discipline, along with incrementally higher inflow from B-30 cities.'We remain optimistic over the mid- to long-term horizon amid improving geographic penetration as well as the rising popularity of mutual fund schemes, mainly among the young and mid-income investors,' she said.InCred's top pick is Nippon (Rs 920 target price) for its consistent performance-led market share gains.'We appreciate the yield protection by HDFC AMC (HOLD, TP Rs5,600), although the recent run-up in the stock price makes the risk-reward ratio unfavourable. We maintain ADD rating on ABSL AMC (TP Rs1,000) for the slowdown in market share loss and its turnaround story. The undercurrent of the likely acquisition of UTI AMC (ADD, TP Rs1,600) makes the stock attractive,' it said.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)