ICICI Prudential, HDFC AMC, or Nippon: Choosing the Best Long-Term Mutual Fund Investment

India’s mutual fund industry has experienced significant growth over the past decade, driven by rising financial awareness, steady SIP inflows, and a shift from physical to financial savings. Within this expanding space, asset management companies (AMCs) like ICICI Prudential AMC, HDFC AMC, and Nippon Life India AMC have emerged as key players with robust brands, substantial assets under management (AUM), and consistent profitability.

For long-term mutual fund investors, the decision between these AMCs is less about short-term market cycles and more about business quality, growth visibility, governance, and valuation. This article delves into how each AMC aligns with an investor’s long-term goals.

Industry Overview

The Indian mutual fund industry has seen a remarkable transformation over the past decade. Rising financial awareness, the growing SIP culture, and increasing participation from retail investors across cities and towns have fueled this expansion. As of November 2025, the industry’s average assets under management (AAUM) stands at Rs. 81.31 lakh crore, with total AUM at Rs. 80.80 lakh crore. This represents a more than six-fold increase from Rs. 12.95 lakh crore in November 2015, highlighting how mutual funds have evolved from a niche investment option to a mainstream wealth-building vehicle.

India’s AMC Sector

Asset management companies benefit from the long-term trend of rising financialisation, steady SIP inflows, and growing equity participation. As mutual funds become more prevalent, AMCs operate like consumption plays with high operating leverage. This makes business quality and capital efficiency more crucial than short-term market cycles.

About the Companies

ICICI Prudential AMC, incorporated in 1993, is an asset management company focused on managing risk while delivering long-term returns. As of September 30, 2025, it manages a quarterly average AUM of Rs. 10,147.6 billion and offers a range of services including portfolio management, alternative investment funds, and advisory services to offshore clients.

Nippon Life India Asset Management manages mutual funds (including ETFs), managed accounts such as PMS, AIFs, pension funds, and offshore advisory mandates. It ranks as the 4th largest AMC in India based on total and equity QAAUM, and is the No.1 non-bank sponsored and foreign-owned AMC, with a QAAUM of Rs. 6,565 billion. This underscores its strong and consistent market position.

HDFC Asset Management Company Limited, founded in 1999 and headquartered in Mumbai, offers equity, fixed income, balanced, and real estate mutual fund products. It follows a fundamental investment approach and operates as a subsidiary of HDFC Bank Limited. As of September 30, 2025, it manages a quarterly average AUM of Rs. 8,814 billion.

Current Market Price

As of the latest data, ICICI Prudential Asset Management Co Ltd closed at Rs. 2,634.80 per equity share, HDFC Asset Management Company Ltd at Rs. 2,649.50 per equity share, and Nippon Life India Asset Management Ltd at Rs. 870.70 per equity share.

Market Capitalisation

ICICI Prudential AMC and HDFC AMC command similar market capitalisations of around Rs. 1.30 lakh crore and Rs. 1.13 lakh crore, respectively, reflecting their strong market size and investor trust. Nippon Life India AMC, with a market cap of about Rs. 55,419 crore, is significantly smaller but has established a credible position despite not being bank-backed, indicating strong standalone brand acceptance.

Profitability and Capital Efficiency

ICICI Prudential AMC excels in capital efficiency, with a return on equity (ROE) of about 82.8 percent and a return on capital employed (ROCE) of over 111 percent. In contrast, HDFC AMC has an ROE of about 32.4 percent and ROCE of over 43.3 percent, while Nippon Life AMC has an ROE of about 31.4 percent and ROCE of over 40.7 percent. These figures indicate that ICICI Prudential AMC generates significantly more profit for every rupee of capital employed, supporting a valuation premium.

Revenue and Earnings Scale

ICICI Prudential AMC reported FY25 revenue of Rs. 4,682.7 crore with a profit after tax (PAT) of Rs. 2,650.6 crore, placing it ahead of both peers in absolute earnings. HDFC AMC reported revenue of about Rs. 3,498 crore and PAT of Rs. 2,461 crore, while Nippon Life India AMC posted revenue of Rs. 2,065.2 crore and PAT of Rs. 1,252.2 crore. ICICI Prudential AMC’s higher scale, combined with stronger profitability, reflects its diversified product mix and distribution strength.

Valuations

On trailing valuations, ICICI Prudential AMC trades at a P/E of around 44.5x, while HDFC AMC trades at 41.4x and Nippon Life AMC at 41.7x. The real divergence appears in price-to-book ratios. ICICI Prudential AMC trades at about 32.9x price to book value, significantly higher than HDFC AMC at around 14.6x and Nippon at roughly 12.7x. This means investors are paying a steep premium for ICICI Prudential AMC’s capital efficiency and growth visibility.

Distribution Advantage and Growth Outlook

ICICI Prudential AMC benefits from strong distribution through ICICI Bank, giving it superior reach across retail and institutional investors. Analysts expect their equity AUM growth to outpace the industry by about 2.5 percent annually over FY25–28, translating into a projected core PAT CAGR of around 18.5 percent.

HDFC AMC remains a high-quality franchise with consistent performance and strong brand recall, but its rich valuation limits near-term upside. Nippon Life AMC, while smaller, offers relatively better valuation comfort and has demonstrated credible fund performance without bank backing, making it attractive for investors seeking a balanced risk-reward profile.

Conclusion

ICICI Prudential AMC justifies its premium through superior capital efficiency, higher earnings scale, and a powerful distribution engine, making it a strong long-term compounder. HDFC AMC offers stability and franchise strength but at valuations that leave limited margin of safety. Nippon Life India AMC stands out as the valuation-comfort play, appealing to investors who prefer quality growth at a relatively lower price. For long-term mutual fund investors, the choice ultimately depends on whether they prioritize business efficiency, brand stability, or valuation comfort.