Can Canara Robeco attract long-term investors amidst market volatility? – News Air Insight

ET Intelligence Group: Canara Robeco Asset Management Company plans to raise ₹1,326 crore through an offer for sale (OFS). The promoter’s stake will decline to 75% after the issue from 100%. The fund house’s business is largely equity-driven with equity-oriented schemes accounting for around 92% of its quarterly average assets under management (QAAUM). That makes its earnings sensitive to equity market volatility. The company has the lowest profit after tax margin among peers, which is reflected in its relatively modest IPO valuation. The issue is suitable to long-term investors with a high-risk appetite who can withstand market fluctuations.

Business

Established in 1993, Canara Robeco manages 26 mutual fund schemes – 12 equity, 10 debt, and four hybrid. The equity AUM grew by 30.9% annually between FY23 and FY25 to ₹94,757 crore. By equity AUM, the AMC holds the highest share among the top 10 AMCs.

As of June 30, 2025, retail and HNI investors accounted for ₹1.01 lakh crore, or 87% of its monthly average AUM. SIP assets formed about 33% of total AUM, well above the industry average of 21%. However, the number of active SIP accounts declined to 21.4 lakh from 23.2 lakh between FY24 and FY25 after new regulations classified inactive accounts (with no transactions for three months) as dormant.

The company managed 50.5 lakh folios, of which 99% belonged to individual investors. According to Crisil, SIP AUM in the industry is expected to grow 25-27% annually and equity AUM by 20-21% between FY25 and FY30.

Financials
Net profit more than doubled to ₹191 crore in FY25 from ₹79 crore in FY23, while profit yield improved to 0.18% from 0.14%. However, this remains below 0.19-0.33% for the peers. Revenue rose to ₹404 crore in FY25 from ₹205 crore in FY23. The AMC’s QAAUM grew 28.6% annually to ₹1.1 lakh crore during the period. The cost to income ratio improved to 34.2% from 47.7%.Valuation
The IPO is priced at 27.8 times FY25 earnings compared with 48.2 for HDFC AMC and 43.3 for Nippon Life India AMC but higher than 24.6 for Aditya Birla Sun Life AMC and 22.8 for UTI AMC.