Centrum Broking
HDFC AMC (Buy)
Target: ₹3,630
CMP: ₹3100.55
HDFC AMC Q3-FY21 earnings were a beat on PAT mainly led by other income. Revenue was in line and operating expenses were slightly higher leading to a PAT of ₹370 crore (our estimate: ₹340 crore). Opex efficiency remains a focus and the company maintains its target cost savings of ₹35-40 crore in FY21E of which ₹25 crore has been achieved in 9M-FY21.
Revenue at approximately ₹482 crore (was largely in-line) while QAAUM came in at ₹3,89,500 crore was mainly as expected. SIP for Dec-20 slightly up-ticked to ₹910 crore vs ₹900 crore q-o-q. Other income at ₹113.10 crore beats estimates of ₹82 crore.
We are optimistic about the AMC space as the equity market upmove is yet to fully reflect in AMC company valuations. We like HDFC AMC given its opex efficiency, distribution network and market leadership. Owing to the equity market recovery and recent management changes we envisage better equity performance over FY21-.
We have not materially changed our FY21/22 estimates, however, AMC valuations are yet to fully reflect the strong equity market rebound witnessed over 9M-FY21.
We raise our P/E multiple to 43.2x (36.0x earlier), roll forward to FY23E EPS and revise our TP to ₹3,630 (₹2,741 earlier).