Canara Robeco AMC
IPO Size: Rs. 1,326 cr, Entirely Offer for Sale (OFS)
- 52% or Rs. 690 cr of OFS by promoter Canara Bank (51% stake to drop to 38%)
- 48% or Rs. 637 cr by foreign promoter Japan’s Orix Corp (49% to shrink to 37%)
Price band: Rs. 253-266 per share
M cap: Rs. 5,304 cr, implying 25% dilution
IPO Date: Thu 9th Oct to Mon 13th Oct 2025, Listing Thu 16th Oct 2025
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
Equity-Focused Asset Manager
Canara Robeco Asset Management Company (Canara AMC) is an 18 year old mutual fund, yet enjoys only 1.5% market share in the Rs.72 lakh cr domestic mutual fund industry, ranking 18th among 44 players, largely dominated by top 10 AMCs cornering 77% market share. As of 30.6.25, quarterly average asset under management (QAAUM) was at Rs.1.1 lakh cr, 91% of which was equity-oriented, much higher than 56% industry-average.
Slower-than-Industry AUM Growth
Canara AMC’s AUM growth of 28.6% CAGR between FY22-25 trailed industry growth of 29.0%, implying market share loss. Infact, industry’s equity AUM rose at 33% CAGR between FY23 to FY25, but equity-focused Canara clocked less than 29% CAGR, implying greater loss of market share.
Margins on Lower Side
While equity schemes are considered higher margin, Canara’s revenue yield of 0.39% is on the lower vis-à-vis listed peers - HDFC AMC 0.47%, Nippon 0.38%, Aditya Birla 0.44%, UTI 0.43% and even ICICI Pru’s 0.57% looking to list soon.
Moreover, even though 100% of equity schemes are actively managed, profit yield of 0.2% is also the lowest among peers - HDFC 0.33%, Nippon 0.23%, Aditya Birla 0.25%, UTI 0.2%, ICICI Pru 0.3%.
Profit Mix
FY25 revenue stood at Rs. 404 cr, with Rs. 191 cr PAT, translating into Rs. 9.6 EPS. Q1FY26 revenue of Rs. 121 cr resulted in Rs. 61 cr PAT. Of this, 30% or Rs. 24 cr came from net gain in fair value changes in Q1FY26, which was at Rs. 39 cr or 15% of profit in FY25.
Fully Valued for a Marginal Player
M cap of Rs. 5,300 cr is 4.8% of AUM of Rs. 1.1 lakh, lower than Aditya Birla’s 5.8% as well as Nippon Life’s 8.9%, but comparable to UTI AMC’s 4.6%. Since Canara AMC’s profitability is lower than peers, AUM is not the most appropriate benchmark.
On earnings basis, Canara AMC’s PE of 21.7x on an annualized Q1FY26 EPS of Rs. 3.1, is lower than Nippon’s 34x but slightly higher than Aditya Birla’s 21.3x, despite lower profit yield. UTI’s PE of 17.5x is not considered, as 60%+ of UTI’s Q1FY26 profit was non-free income.
Although dependance on parent Canara Bank for distribution is in single digit, company remains a marginal player in the highly competitive industry (where large players are getting larger), and Canara Robeco AMC is experiencing market share loss, coupled with weaker profitability vis-à-vis peers.
9th Oct 2025 at 08:58 am