HDFC Asset Management Company Ltd. share price target

We have reduced our EPS estimates for FY26E and FY27E to INR 128.3 and INR 144.7 respectively, factoring in higher finance costs We remain cautious in the near term due to market volatility and weak investor sentiment.

HDFCAMC saw a soft quarter as core income missed PLe by 2.3% due to revenue being 1.7% lower led by weaker yields at 46.6bps (PLe 47.5bps) as (1) equity share fell QoQ to 60% from 61% to market correction in Feb'25 and (2) Q4FY25 has 2 lesser days (vs Q3FY25). Equity performance within the 3-yr bucket remains superior, which resulted in strong net flows' market share of 12.9% in FY25. New ESOP scheme of 2.5mn shares has been approved which is awaiting shareholder approval. Hence, we raise staff cost for FY26/27E by 7%/3%. Closing equity AuM for the industry corrected by 3.0% over Dec'24Mar'25 and markets continue to remain volatile. Equity flows for the industry...

HDFC AMC’s operating revenue was up 30% YoY/down 4% QoQ at INR9b (in line) in 4QFY25. Yields for the quarter came in at 46.6bp vs. 45.4bp in 4QFY24 and 47.5bp in 3QFY25. FY25 yields stood at INR35b, up 35% YoY.

Consistent performer in a growing industry

HDFC AMC is India's third-largest mutual fund house with QAAUM of INR7.9t. It holds an overall market share of 11.5% and a 12.8% share in actively managed equity QAAUM, underpinned by strong brand reputation, consistent fund performance, and an extensive distribution network.

space, drawing parallels US market from 1980s-2000s. Hence unique investors for the MF industry (52.6mn in Dec'24) can increase at a good pace. HDFCAMC will be a dominant player in this journey as its strong brand value is a function of its track record led by strong investment, risk and product management. Investor behavior is maturing as industry saw stable SIP flows during falling markets. Distributors have not objected to commission cuts as AuM growth...

3QFY25 operating revenue grew 39% YoY/5% QoQ to INR9.3b (in line with est.). The sequential growth was driven by AUM growth and a 0.7bp QoQ improvement in yield to 47.5bp (1.1bp YoY decline)

In Q2FY25, revenue stood at INR 8,872 Mn, an increase of 38.0% YoY/ 14.4% QoQ, led by strong AUM growth and sequential improvement in blended yields. Revenues were 2.3% better than our estimates.

In Q1FY25, revenue growth stood at INR 7,752 Mn, an increase of 34.9% YoY/ 11.5% QoQ, led by strong AUM growth and sequential improvement in blended yields. Revenues were in line with our estimates.

In Q4FY24, revenue stood at INR 6,954 Mn, an increase of 28.6% YoY/ 3.6% QoQ. Revenues were 6.3% lower than our estimates due to the fall in blended yields.

Higher equity share drove strong overall QAAUM growth of 36% YoY in FY24; expansion in equity QAAUM market share a key positive

High Conviction Stocks Idea

As of December 31, 2023, the QAAUM stood at INR 5,515 Bn, reflecting 24.0% YoY/ 5.1% QoQ growth owing to the optimism seen in the capital markets over the past few quarters. The Company’s unique investor base stood at 8.7 Mn as against 42.0 Mn unique investors in the industry.