Shares of Aditya Birla Sun Life AMC fell more than 4 percent in morning trade on October 22 after the asset management company reported a decline in its September quarter profit amid higher operating and employee costs. The stock was trading around Rs 912, down 4.04 percent, during morning trading on the NSE.

The company reported a net profit of Rs 221 crore for the quarter ended September 2026, compared with Rs 241 crore in the corresponding quarter a year earlier, marking an 8 percent year on year decline. Revenue increased 5 percent to Rs 484 crore from Rs 461 crore in the year ago period, while other income declined to Rs 42 crore from Rs 45 crore.

Overall expenses increased 20 percent year on year to around Rs 230 crore. Employee benefit expenses rose 33 percent to Rs 126 crore, driven by higher headcount, employee stock option expenses and the absence of a provision reversal recorded in the previous year.

Operating expenses increased 21 percent to Rs 2.2 billion, pushing the cost to income ratio to 44.6 percent from 38.7 percent. EBITDA declined 5 percent to Rs 2.7 billion, while the EBITDA margin contracted to 55.4 percent from 61.3 percent.

Nomura maintained its Buy rating on the stock but reduced its target price to Rs 1,230 from Rs 1,260. The brokerage described the quarter as largely in line with expectations and highlighted employee stock option costs as a key factor affecting profitability. Nomura also lowered its FY27 to FY29 earnings per share estimates by 2 to 3 percent, citing higher ESOP and marketing costs as well as lower expected assets under management growth.

Motilal Oswal Financial Services also retained its Buy rating with a target price of Rs 1,160. The brokerage said the company's core operating performance remained broadly in line with expectations, while other income contributed to a better reported profit performance than expected.

Going forward, improvement in fund flows and recovery in market share remain important monitorables for Aditya Birla Sun Life AMC. The increase in operating and employee costs is likely to remain a key factor for earnings margins, particularly as the company invests in growth and employee compensation.

The quarterly results have therefore triggered near term pressure on the stock, although brokerages continue to maintain a positive view based on the company's operating performance and potential improvement in flows.