Target: ₹3,900

CMP: ₹3,454.95

We upgrade core earnings for by 10.5/15.1 per cent led by strong equity MAAuM (monthly average asset under management) growth in FY24 YTD (+46 per cent for HDFC AMC vs +37 per cent for industry). The company saw a good quarter yet again. QAAuM (quarterly average asset under management) was a bit lower; revenue was in-line suggesting tad better realisation at 48.7bps (49bps in Q2’24).

Change in TER slabs for 61 per cent of active equity was offset by increase in equity mix by 2.9 per cent q-o-q and fall in debt/liquid, protecting blended yields. Equity performance within one-year and 3-year buckets remains best-in-class which has resulted in strong net flows’ market share of 23 per cent over Apr-Nov’23 (vs 8.6 per cent in FY23).

Hence equity market share at 12.6 per cent further expanded (+26bps QoQ). Over FY23-26, we see core PAT CAGR of 18 per cent (earlier 12.5 per cent). Stock is trading at 34.4x; rolling forward to FY26 core EPS we raise multiple to 39x from 35x (5yr avg. of 40x) since HDFC AMC should continue to deliver better than industry equity returns.

Our target price rises to ₹3,900 from ₹3,000.

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