Our target price for Birla AMC of Rs605 is based on a two-stage Gordon Growth Model, which assumes a high-growth period of 15 years, stage-1 growth of ~14.5% (4% in steady state), and a dividend payout of 65% (70% in steady state). It gives us a P/E of 16x, which we multiply with Mar '27E EPS to arrive at a target price.

Key upside/downside risks that could cause the stock to deviate from target price include: capital market strength/weakness and higher/lower returns, which could influence investor interest in mutual funds as well as regulatory action. Lower/elevated costs driven by inflation trend are also a major risk.