MC EXCLUSIVE India is an infinite market at the right price: ICICI Pru AMC's Nimesh Shah bets on scale over margins

Nimesh Shah

If you can deliver a low-cost product to India’s middle class, the market is “infinite,” says ICICI Prudential AMC Managing Director and CEO Nimesh Shah — and that is why he is relaxed about margins even as the fund house prepares for its blockbuster IPO.

Shah said the core growth driver for both the industry and his firm will remain customer experience, not pricing power. “If you can deliver a product with minimum margins to the middle class of the country, the market is infinite, that's how I look at it,” he told Moneycontrol in an exclusive interaction on the sidelines of the IPO launch, which opens on December 12.

He argued that in India, asset management is fundamentally a volume business. “In this business one should not worry about margin, one should worry about volume,” he said. Lower fees, he added, strengthen the proposition rather than dilute it. “If I am charging less, my probability of meeting benchmark is higher. So, business is more sustainable,” he said.

Shah acknowledged that ICICI Prudential AMC’s operating margins have stayed flat to slightly lower over the past two to three years, even as assets under management have risen sharply. But he said overall profitability has kept growing, helped by strong industry-wide sales momentum and steady investor flows. “Look at my profit growth over the last three years and see my margins have been dropping all three years, and still I am okay,” he said.

He credited much of the industry’s expansion to regulation and investor experience. SEBI, he said, has ensured that mutual funds remain “very pure and transparent for the final investor,” while performance has done the rest. “In this business you can get money only if the past experience of the customer is good,” he said.

That experience, he noted, has been shaped by the rise of SIPs and the way investors behaved in recent corrections. “When the markets corrected, the SIPs didn’t stop. When the markets corrected, more money came into the market,” he said, calling it evidence of how the Indian investor has evolved.

A key element of ICICI Prudential’s strategy, Shah said, is recognising that “the customer is always pro-cyclical” while successful investing requires a counter-cyclical approach. He pointed to the AMC’s dynamic asset allocation and balanced advantage products, which he described as being designed to work against prevailing market emotion. “When the customer is selling, the fund is buying. When the markets are going up, the fund is actually selling,” he said, adding that the category has been built out over many years and now commands more than 25 percent market share in asset allocation products.

On the margin debate, Shah underlined that the reported number is an aggregate of very different businesses. ICICI Prudential runs “five different businesses with five different margins” — liquid funds, overnight funds, equity funds, hybrid funds and others. “What margins you see is a mix of all these funds. And these all are different businesses,” he said. Liquid and overnight categories, largely institutional, naturally run at lower margins than equity and hybrid segments focused on individual investors. “What you see as a margin is a cocktail of all of this put together,” he said.

Asked whether current margin levels can be maintained, Shah said no chief executive can forecast that with certainty because it depends on market conditions and growth across segments. “You make your assumptions how much will liquid grow, how much will equity grow. I am positioned. In each business I have got a good market share. I am focused on a profitable growth in every business of mine. What you see is an outcome,” he said.

ICICI Prudential AMC’s IPO will be a 100 percent offer for sale, comprising up to 9.91 percent of the company’s equity share capital. The fund house — a joint venture between ICICI Bank and Prudential Corporation Holdings — will become the sixth AMC to list in India. The price band is set at ₹2,061–2,165 per share, valuing the company at around ₹10,600 crore at the top end. The issue opens on December 12 and closes on December 16.

Financially, the AMC has delivered strong momentum ahead of its listing. It reported ₹1,618 crore in profit and ₹2,949 crore in revenue in the six months ended September 2025, marking year-on-year growth of 21.9 percent and 20 percent, respectively. For FY25, profit rose 29.3 percent to ₹2,651 crore, while revenue increased 32.4 percent to ₹4,977 crore. ICICI Prudential AMC currently commands a 13.2 percent market share and manages 143 mutual fund schemes, the largest suite among domestic asset managers.

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