HDFC Asset Management Company Ltd. share price target

HDFC AMC reported yet another steady quarter with EBITDA of Rs4bn (broadly flat for past 10 quarters) with equity AUM growth of 18% YoY in Q4FY23, and commendable cost performance (8% CAGR between FY20-FY23).

Q4 net profit missed our estimate by 7% owing to below-expected revenue of Rs 6.4bn and QAAUM of Rs 4.5tn

QAAUM (Quarterly Average Assets Under Management) was at INR 4,448 Bn as of December 31, 2022, a growth of 1.0% YoY. The market share in QAAUM stood at 11.0% of the mutual fund industry in this quarter, which was flat on a sequential basis. In Q3FY23, revenue growth stood at INR 5,296 Mn, a growth of 2.7% QoQ/1.8% YoY driven by 2.6% YoY/ 4.4% QoQ growth in AUM. The yields for the quarter were sequentially stable.

HDFC Asset Management (HDFC AMC) reported 2% QoQ growth in EBITDA driven by stable operating revenues yields (50.3bps in Q3FY23 vs 50.8/50.2bps in Q1/Q2FY23) on the back of higher equity mix. Company has fared well in terms of: (1) fund performance, (2) improvement in flow market share and equity AAUM market share.

Q3 net profit growth muted at 3% YoY owing to weak revenue pickup and higher operating expense