Is ICICI Pru AMC’s IPO a compelling bet for investors with a high-risk appetite and a long-term horizon?

ET Intelligence Group: ICICI Prudential AMC plans to raise up to ₹10,600 crore through an offer for sale by Prudential Corp Holdings. The promoter shareholding will decline to 90.1% from 100% after the IPO. The issue is priced at the upper end of sector valuations, reflecting the company’s strong growth in assets under management and a rising investor base. However, the company’s performance relies heavily on retail investors and is exposed to market volatility.

Given these factors, the issue looks suitable for investors with a high risk appetite and a long-term investment horizon.

Business
Incorporated in 1993, ICICI Prudential AMC offers portfolio management services (PMS), alternative investment fund (AIF), and advisory services. It is the largest AMC in India in terms of active mutual fund quarterly average asset under management (QAAUM) with a market share of 13.3% as of September 30, 2025. As of September 2025, it had an active QAAUM of ₹8.6 lakh crore, growing year-on-year at 18.6%, outpacing the industry growth rate of 16.8%. It managed 143 schemes as of September 30, 2025, the largest number of schemes in the mutual fund industry. Its individual investors base reached 15.5 million as of September 30, 2025, accounting for 61% of total mutual fund monthly AAUM and 85.7% of equity and equity-oriented schemes monthly AAUM as of September 30, 2025. Retail investors tend to favour equity oriented schemes, which generally attract higher investment management fees as compared with non-equity oriented schemes. Beyond mutual funds, its alternative business added ₹72,930 crore in QAAUM as of September 30. It faces regulatory risks, as changes such as caps on total expense ratios or stricter compliance norms may compress margins and push up operational costs.

Financials
Revenue increased to ₹4,683 crore in FY25 from ₹2,689 crore in FY23 while net profit rose to ₹2,651 crore from ₹1,516 crore during the period. During the first half of FY26, revenue reached ₹2,733 crore from ₹2,187 crore in the year-ago period whereas net profit rose to ₹1,618 crore from ₹1,327 crore by similar comparison. The total QAAUM increased to ₹8,79,410 crore in FY25 from ₹4,99,630 crore in FY23 while active QAAUM increased to ₹7,55,230 crore from ₹4,49,240 crore during the period. Return on equity improved to 82.8% in FY25 from 70% in FY23.

Valuation
Based on annualised profit for six months to September 2026, the price-earnings (P/E) multiple works out to 33, compared with 18-36 for peers including HDFC AMC, Nippon Life India Asset Management, UTI AMC and Aditya Birla Sun Life AMC. In addition, it commands a market capitalisation-to-AUM multiple of 10.5 compared with four-thirteen for peers.