HDFC AMC shares rise 5% after Q2 results; check analysts views, targets & more

Brokerage firms are largely positive on HDFC Asset Management Company Ltd after the strong quarterly performance in October-December 2024 period on the back of improvement in yields and controlled cost for the mutual fund sponsor. Dalal Street cheered its quarterly earnings and management commentary as the stock rose 5.08 per cent to Rs 4,060 on Wednesday.

On Tuesday, HDFC Asset Management Company (HDFC AMC) reported a 31 per cent YoY jump in its consolidated net profit at Rs 641 crore for December quarter. The revenue from operations stood at Rs 935 crore, up 39 per cent YoY, in the third quarter of the ongoing financial year. It had 22.1 million active accounts at the end of the reported quarter.

HDFC AMC continued to post a steady Q3FY25 operational performance turning in growth across equity QAAUM, equity AUM market share, SIP flows and unique individual accounts share, said Nuvama Institutional Equities. "Adverse equity markets counterbalanced net inflows, leading to an 80bp QoQ dip in the share of equity in QAAUM to 64.9 per cent," it said.

"This drove up revenue and Ebit 39.2 per cent and 51 per cent YoY while APAT grew 31.4 per cent YoY. We are building in improved yields to lift our FY25E/26E/27E NOPLAT by 3.4 per cent/4.1 per cent/3.5 per cent. Our target price, thus, inches up to Rs 5,200 based on FY26E/27E EV/NOPLAT of 44 times/37.5 times;" it added with a 'buy' rating.

The increasing share of equity in the overall AUM, driven by an anticipated higher CAGR of 30 per cent in equity AUM versus overall AUM CAGR of 24 per cent, will help to mitigate the potential decline in yields. We expect scale benefits from new businesses to translate into higher profitability, said Motilal Oswal Financial Services, which has a 'buy' rating on the stock with a target price of Rs 5,200.

HDFC Mutual Fund is the third-largest fund house in India, with average quarterly assets under management (AUM) of Rs 7.9 trillion in Q4. HDFC Asset Management's AUM market share in Q4 stood at 11.5 per cent, while it was at 12.8 per cent in the actively managed fund space.

Overall calculated revenue yield has inched up 1 bp QoQ to 47 bps in Q3, despite share of equity in total AUM declining 80 bps QoQ, said YES Securities. While there was no incremental change to distributor commission payout, some of the impact of changes in Q2 spilled over into Q3, it said.

While expenses were under control for the quarter, management guided for reasonable growth for the same: The other operating expenses were down by 14.4 per cent QoQ but up by 7.2 per cent YoY. Expenses for the quarter were lower due to lack of NFOs and lower CSR expenses. Management guides for overall cost to rise at 12-15 per cent, it added with an 'add' rating and a target price of Rs 4,485.

HDFC AMC’s core earnings and headline PAT growth were ahead due to higher other income and lower operating expenses, said Kotak Institutional Equities. "Operational updates are largely stable with fund performance and broader markets being the key monitorable. The recent correction makes valuations a bit more palatable, even though we await a more attractive entry point to turn positive," it said with a 'reduce' tag with fair value of Rs 4,200.