Stock in Action - HDFC AMC

Highlights

1. HDFC AMC's share price has gained over 49% year to date in 2024, making it one of the top performers in the Indian market.

2. HDFC AMC's financial performance has grown over the past year.

3. HDFC AMC's quarterly earnings report highlighted a decline in net profit in the September quarters reaching ₹577Cr in June.

4. For HDFC AMC's stock analyst forecasts positive trends for the future.

5. HDFC AMC's share price moved from ₹4100 to ₹4850 in October 2024.

6. HDFC AMC stock has outperformed the market, delivering a positive return of over 68% in the past year.

7. HDFC AMC is currently trading at ₹4821 showing a 5.85% increase as of 11:10 am on NSE.

8. HDFC Asset Management Company reported a net profit of ₹576.61 crore for the quarter ending in September 2024 marking a 32% increase from ₹436.52 crore in the same quarter last year.

9. Analysts have recommended a buy call on HDFC AMC with a target price of ₹5360.

10. As per the September quarter filings the company has a 52.51% promoter holding, 16.92% DII holding and 21.55% foreign institutional investor (FII) holding.

Why is HDFC AMC in the News?

HDFC Asset Management Company's share price jumped over 5% to a record high of ₹4,783.75 on Wednesday after it reported strong earnings for the second quarter of FY25. The company posted a net profit of ₹576.61 crore for the September 2024 quarter a 32% increase from ₹436.52 crore in the same period last year.

Total income rose by 38% to ₹1,058.19 crore in Q2FY25 compared to ₹765.35 crore a year ago. HDFC AMC's Assets Under Management (AUM) grew by 7.5% reaching ₹7.58 lakh crore by the end of Q2.

The company’s equity market share held steady at 12.9% while its share in the debt market increased slightly to 13.5%. Quarterly Average Assets Under Management (QAAUM) in actively managed equity oriented funds excluding index funds was ₹4,67,600 crore representing a 12.9% market share.

Analyst’s View on HDFC AMC

Nuvama Institutional Equities stated that strong equity markets and inflows increased the share of equity in HDFC AMC’s average assets under management (QAAUM) to 65.7% driving revenue and EBIT up by 38% and 47.4% year on year. The firm maintained a buy rating on HDFC AMC shares and raised the target price to ₹5,240 from ₹4,910.

Phillip Capital highlighted that strong asset growth came from rising equity markets but noted that equity yields could drop if the equity share currently at a high of 65.7% declines. The firm gave a neutral rating with a revised target price of ₹4,470 expecting limited upside.

Kotak Institutional Equities mentioned that while HDFC AMC is performing well the stock seems fairly valued with limited potential for further gains. It kept a deduce rating and an unchanged target price of ₹4,200 slightly increasing earnings estimates and valuing the stock at 30x its projected September 2026 earnings.

Conclusion

HDFC Asset Management Company's strong financial performance in Q2FY25 including a 32% year on year rise in net profit to ₹576.61 crore has driven its stock price to record highs, gaining over 49% in 2024. Its Assets Under Management (AUM) grew by 7.5% and its market share in equity funds remains solid at 12.9%.

Analysts have mixed views with Nuvama maintaining a buy rating while Phillip Capital and Kotak see limited upside due to valuation concerns. Overall, HDFC AMC continues to perform well but future growth may depend on maintaining its current equity market share and yields.