HDFC AMC Shares: Buy HDFC Asset Management Company, Target Price Rs 2275: JM Financial

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has a call to buy with a target price of Rs 2275. The current market price of HDFC Asset Management Company is Rs 1856.25. The period given by the analyst is one year when . the price can reach the set target.

HDFC Asset Management Company Ltd., incorporated in 1999, is a large capitalization company (having a market capitalization of Rs 39972.46 Crore) operating in the financial services sector.

The major products/revenue segments of HDFC Asset Management Company Ltd. includes income from portfolio management services and investment management and advisory fees for the year ending March 31, 2022.

Finance

For the quarter ended 30-06-2022, the company reported total standalone revenue of Rs 532.90 Crore, down -8.27% from last quarter, total revenue of Rs 580.93 Crore and a decrease of -12.35% compared to the same quarter of last year. Total revenue of Rs 607.99 Crore. The company reported a net profit after tax of Rs 314.19 Crore last quarter.

Investment rationale
HDFC AMC recorded a flat quarter with an operational PBT of INR 3.7 billion (+2% YoY, -1% QoQ) due to moderate growth in core revenue and expense operations (+3% YoY and +4% YoY respectively). Global MF QAAUM was down -4% QoQ (stable yoy) while MF QAAUM Debt was down 12% qoq (-24% yoy) while MF QAAUM Equity was flat yoy quarterly (+16% year-on-year). Positively, core income yields improved to 50 basis points (from 48 basis points QoQ) thanks to the improved proportion of higher yielding MF QAAUM stocks across the MF QAAUM set to 52, 1% (+200 basis points QoQ) while the MF QAAUM debt mix decreased to 22.3% (-210 basis points QoQ) . The overall market share of AUM and Equity AUM saw marginal improvement to 11.2% and 11.5% respectively. (+11bps QoQ and +7bps QoQ respectively). Management indicated that this was largely due to HDFC AMC’s improved share of net entries and is expected to continue through improved program performance. Additionally, HDFCAMC’s SIP flows increased to INR 12.8 billion on June 22 (from INR 12.3 billion on March 22). The brokerage has moderated AUM growth assumptions due to the recent equity market slump and capital outflows in the debt segment and is now building AUM growth of 2.9%/19.6 % over the 23/24E financial year. Its main PBT growth estimates for FY23/24E are flat/+9% YoY for FY23/24E. HDFCAMC is currently trading at 29x P/E (NTM), implying a 24% discount to its historical average. valuations and we believe that share price performance is highly dependent on the company’s market share gains/losses. The new management has taken steps in the right direction and we believe that favorable results over the next 12-18 months should see the stock return to its underperformance relative to its peers.


Promoter/Fii Holdings
The promoters held 68.8% of the company’s capital as of June 30, 2022, while the FIIs held 16.51% and the DIIs 2.09%.

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