HDFC AMC hits record high, rallies 11% in 6 days; m-cap nears Rs 1 trillion

Thus far in calendar year 2024, HDFC AMC share price has outperformed the market by surging 43 per cent, as against 13 per cent rise in the benchmark index. In the last 18 months, the stock has appreciated 155 per cent.

A sharp rally in the stock price of HDFC AMC has pushed the market capitalisation of the company towards Rs 1-trillion mark. Currently, the stock was trading 1.8 per cent higher at Rs 4,562 with a market cap of Rs 97,452 crore, BSE data shows.

A meeting of board of directors of HDFC AMC is scheduled to be held on Tuesday, i.e. October 15, 2024, inter-alia, to consider and approve un-audited standalone and consolidated financial results of the company for the quarter and half year ending September 30, 2024, the company said in an exchange filing.

Meanwhile, HDFC AMC delivered a strong performance in Q1FY25 driven by robust business growth momentum. The capital market optimism and increasing SIP inflows bolstered the overall asset under management (AUM) for the company, with a continued focus on equity-oriented products. HDFC AMC remained committed to innovation and new product launches to align with customer preferences. Sequential improvement in yields in Q1FY25 led to core revenue growth, reflecting the company’s positive trajectory, according to analysts.

With the mutual fund industry set for expansion due to factors such as the rising significance of financial savings among Indian households, untapped potential in mutual funds, growing investor awareness and education, strong distribution platforms, and the ease of digital transactions, HDFC AMC aims to capitalise on the opportunities within India’s asset management sector, analysts said.

Industry month’s average assets under management (MAAuM), at the end of August 2024, stood at Rs 66.0 trillion and equity/debt share was 55 per cent/15 per cent. Equity flows continue to remain strong; excluding NFOs, July 2024 and August 2024 together saw net flows of Rs 63,700 crore compared to Rs 85,000 crore in Q1FY25, said analysts at Prabhudas Lilladher in their Q2FY25 earnings preview report.

Equity quarterly average assets under management (QAAuM) growth is likely to be strong yet again in Q2FY25 as industry overall QAAuM grew by 12.3 per cent quarter-on-quarter (QoQ) to Rs 66.2 trillion, while closing equity AuM (incl balanced) saw healthy QTD growth of 8.2 per cent in August 2024, the brokerage firm said. It added that they would most likely upgrade AMC earnings for FY25/26E post Q2FY25, due to strong closing equity AuM growth led by healthy flows and MTM gains.

Healthy up-move in equity markets might result in slightly lower profitability for AMCs, leading to a fall in yields for our companies by 0.9bps QoQ to 43.2bps. “We envisage revenue for our coverage AMCs to increase by 10.3 per cent QoQ to Rs 1,780 crore. For HDFC AMC, fall in yields may be lower as schemes totaling ~50 per cent of AuM have crossed the threshold of Rs 55,000 crore each. Hence, core profitability of NAM/UTI is more sensitive to equity AuM growth,” the brokerage firm said.

Post Q1 earnings, analysts at KRChoksey Shares and Securities had increased its P/E multiple to 40x (earlier 37x) on FY26E EPS of Rs 122.7, given the company’s market positioning and ongoing improvement in the company’s market share. The brokerage firm reiterated its ‘Buy’ rating on HDFC AMC shares with a target price of Rs 4,905 per share.

First Published: Oct 15 2024 | 12:57 PM IST