SBI Funds Management Ltd (SBIFUNDS) Q2 FY27 Earnings Call: QAAUM Up 10%, Retains 15% Market Share, SIP Book Crosses Rs. 2 Lakh Cr

SBI Funds Management Ltd held its Q2 FY27 earnings call on October 23, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Stable Growth Quarter Against a Volatile Macro Backdrop

• H1 FY 2026-2027 operating revenue of Rs.2,336 crore — up 12% vs Rs.2,089 crore in H1 FY 2025-2026; operating profit Rs.1,797 crore (+11% vs Rs.1,626 crore); PAT Rs.1,566 crore; net worth Rs.7,270 crore as of Sep 30, 2026.
• MF QAAUM at Rs.13.14 lakh crore in Q2 FY 2026-2027 — up 10% YoY vs Rs.12 lakh crore in Q2 FY 2025-2026; active QAAUM Rs.8.99 lakh crore (+9% YoY); 5-year CAGR of 17%.
• 15% quarterly average AUM market share — SBI Funds Management retained its position as the largest passive asset manager with passive QAAUM of Rs.4.15 lakh crore, up 11% YoY.
• Macro context per management — steady domestic fundamentals and stable earnings, but higher crude, firm US yields and a stronger dollar triggered foreign outflows, which were absorbed by strong domestic participation.
• Industry quarterly average MF AUM of Rs.87.5 trillion as of Sep 30, 2026 — up 13% YoY and 5% sequentially; industry monthly SIP inflows hit an all-time high of Rs.32,490 crore in September 2026; industry unique customers at 6.3 crore (+11% YoY).
• Operating profit marginally down QoQ — the sequential dip reflects higher Q2 operating costs versus significantly lower Q1 FY 2026-2027 costs, per management.

Broad-Based AUM Growth; Yields Stable with Modest Mix-Driven Dip

• Active equity AUM grew 9% YoY to Rs.8,986 billion — passive AUM up 11% YoY to Rs.4,154 billion; liquid AUM reached Rs.1.2 trillion (+31% YoY) in Q2 FY 2026-2027.
• Yields per Joint CEO Srinivas Jain — equity ~62-63 bps, debt 30-35 bps, liquid 11-12 bps in Q2 FY 2026-2027, characterized as competitive or close to best in class in their categories.
• Yield moderation is mix-driven, not commission-driven — the slight QoQ dip reflects asset-mix movement (higher equity AUM); individual category yields moved by only ~1 paisa, and overall yields rose 1-2 bps YoY in Q2 FY 2026-2027.
• Gross margins stable across equity, debt, liquid and passive strategies in Q2 FY 2026-2027, with continued YoY expansion in gross yields.
• AUM mix roughly 50-50 between MF and non-MF — MF AUM ~Rs.13.5 lakh crore with non-MF at a similar level (Q2 FY 2026-2027); excluding advisory, offshore advisory and alternative asset categories yield roughly 35-40 bps on average.
• PMS/advisory QAAUM at Rs.13.32 lakh crore — broadly in line with expectations; the decline is attributed to reallocation of one large investor's mandate, and management noted the advisory business is technically non-material to revenue, though it did impact overall AUM.
• Regulatory pricing neutral — management reiterated it has been neutral under the regulator's new pricing methodology from April 1, 2026 (start of FY 2026-2027) onwards, with the impact already factored in.

SIP Engine Intact; B30 Stickiness a Structural Positive

• SIP book grew 15% YoY to Rs.2.07 lakh crore — monthly SIP inflows steady at ~Rs.3,900 crore (~Rs.40 billion) in Q2 FY 2026-2027; 1.9 million fresh SIPs added in the quarter.
• 65% of SIP contribution from B30 cities — per MD & CEO Debasish Mishra, 98% of B30 SIP investors have remained invested beyond 36 months (which he said is a regulatory requirement), with many holding for 5-10 years; described as mostly moderate risk takers.
• 1.9 million fresh SIPs sourced across all channels — including the SBI channel, mutual fund distributors, RIAs and robo platforms; management described the flow as "wholesome" and not concentrated in SBI or any single channel.
• SBI group/channel contributed 20% of net inflows in Q2 FY 2026-2027 — broadly in line with its AUM share and unchanged YoY; management expects other-channel flows to improve significantly going forward and cited SBI's 530 million customer base as the long-term acquisition pool.
• Distribution reach of nearly 136,000 partners — over 125,000 IFAs, over 10,000 national distributors, over 96 banking partners (including SBI), 23,000+ SBI branches and 297 company branches, reaching more than 98% of India's pin codes.
• Investor sentiment resilient despite volatility — point-to-point Nifty YTD down 8.2% (as of Q2 FY 2026-2027), yet SIP inflows continue to grow; CBO Manish Mehta cited industry September net sales of about Rs.38,000 crore against a Rs.32,000 crore SIP book, implying roughly Rs.5,000-6,000 crore of incremental lump-sum purchases — cited as evidence investors are maturing.
• Anxiety concentrated in recent entrants — investors who joined the industry in the last 2-3 years show anxiety while long-tenured investors show maturity; SBI MF, along with distribution partners, is educating new investors that long-term investing delivers healthy CAGR returns.

Elevated Q2 Spend Partly One-Off; Moderation Expected from Q3

• Rs.50 crore incremental spend in Q2 FY 2026-2027 — management guided 50-60% will recur going forward (period unspecified), mainly senior management hires and technology; some Q2 items will drop off, with further incremental digital and AI investments planned as the business grows (period unspecified).
• Employee cost ~Rs.27-28 crore higher QoQ in Q2 FY 2026-2027 — management guided that the Q2 cost should be viewed as the ongoing run rate going forward (period unspecified), as Q1 FY 2026-2027 included writebacks; CFO Amol Joshi said 60% of the recent cost increase is recurring while the 30-40% one-time hiring-related component will moderate from that base.
• One-time IT/HR investment to moderate from Q3 FY 2026-2027 — CFO Amol Joshi confirmed the one-time investment (AI, cloud infrastructure, key hirings) "will be definitely moderated... reduced to a large extent" from Q3 FY 2026-2027, with only "a very small part" possibly remaining until end of FY 2026-2027; per MD & CEO Debasish Mishra, these one-off costs will not repeat in Q3 FY 2026-2027.
• Tech spend partly persistent — part of the elevated cloud compute and AI costs is expected to continue (period unspecified); the firm's own data center goes live in a couple of months (H2 FY 2026-2027), and moving cloud instances on-prem should moderate some of these costs — framed as capital investment to improve productivity.
• No numeric employee-cost guidance for FY 2027-2028/FY 2028-2029 — CFO Amol Joshi said costs will grow proportionately with business expansion into AIF, PMS and alternates and the build-out of the sales force and distribution network.
• ESOP policy fully active — CFO Amol Joshi confirmed no exceptional cost increase from ESOPs is expected in the coming quarters of FY 2026-2027.

SIF Momentum, AIF Build-Out and the MF-Only PMS Opportunity

• SIF AUM grew from ~Rs.35 billion to ~Rs.44 billion in Q2 FY 2026-2027 — driven mainly by the newly launched SIF (record collection), with the earlier SIF also seeing net inflows; SBI Funds Management holds 16%+ market share in the SIF segment.
• 2 of 6 SEBI-approved SIF funds launched — 4 more launches expected (period unspecified); Joint CEO Srinivas Jain noted industry-wide SIF inflows are mostly NFO-related, with only a significantly small portion from non-NFO flows and no SIF-specific SIP data available in the market.
• AIF QAAUM at Rs.7,437 crore, up 27% YoY — management is entering private equity and private credit via an internal division (not a subsidiary); it has filed with the exchange, hired a Head of Alternates and is building a team, and expects AIF to become a meaningful top-line and bottom-line contributor in the years to come (period unspecified).
• Category 3 AIF launch planned in the coming months — per Joint CEO Srinivas Jain, with more details once filed with SEBI; Category 2 capability is being built with the newly joined head of AIF, with more cat-3 and cat-2 launches expected in coming days.
• SEBI's proposed mutual fund-only PMS framework — Joint CEO Srinivas Jain said the industry has been pushing for it and JMF (industry body) has also been seeking a lower entry-barrier PMS product; his understanding is the framework kicks in April of FY 2027-2028.
• Internal fund selection team to be in place before the April FY 2027-2028 rollout — management said the company "will definitely be part of" this product category and will share updates in the coming days.
• 5 new products launched in Q2 FY 2026-2027, including 1 SIF — Magnum Equity Ex-A-funded Long Short Fund closed its NFO as one of the largest in its category; SBI Global Thematic Advantage Fund launched under the Gift City franchise (global access via LRS route); value-based/strategic-based products will be launched to consolidate market position, timed to market conditions and investor demand (timing unspecified).

Digital Depth, Improving Fund Performance, Qualitative Outlook

• 94% of transactions done digitally — InvestApp at over 4.3 million (43 lakh) registered users with monthly digital volumes exceeding 1.4 million transactions; new ARAM assisted-onboarding platform (Aadhaar-based biometric KYC, folio creation, PAN-exempt KYC/PEKRN) showcased at the Global Fintech Festival in Mumbai.
• ~70% of equity and equity-oriented hybrid schemes rank in the top 2 quartiles over the last 5 years — per Head of Investments Dinesh Balachandran, ~45% over the last 3 years and >50% over the most recent shorter window (as of Q2 FY 2026-2027); variation across individual funds persists given the fund house's size and breadth.
• Flows following performance — Srinivas Jain cited green shoots: distribution partners are picking up and scaling improved strategies, and in one category the firm currently accounts for ~70-80% of net new money; he hopes this continues over coming quarters.
• Unique customers at 1.85 crore (+10% YoY) as of Sep 30, 2026 — nearly two-thirds of SIP inflows from B30/tier 2-3 markets; management plans to expand regional-language, story-based investor education programs in B30 cities in the coming quarters.
• Offshore funds contributed ~Rs.42,100 crore to overall AUM — alongside a dedicated business head added for the AIF practice.
• Qualitative outlook only for Q3 FY 2026-2027 — management indicated it will return in Q3 FY 2026-2027 with "better results"; no numeric guidance, figures or targets were provided in the closing segment.
• Closing message from MD & CEO Debasish Mishra — as the largest fund manager in the country, SBI Funds Management aims to keep "trust, efficiency, productivity" always on target.