Buy HDFC AMC; target of Rs 6400: Motilal Oswal

Motilal Oswal's research report on HDFC AMC

HDFC AMC’s operating revenue grew 25% YoY/7% QoQ to INR9.7b (in-line). Yields for the quarter came in at 46.7bp vs 46.2bp in 1QFY25 and 46.6bp in 4QFY25. Total opex rose 8% YoY/14% QoQ to INR 2b (in-line), driven by 8% YoY growth in employee costs (in-line) and 7% YoY growth in other expenses (in-line). EBITDA for the quarter was at INR7.7b, up 30% YoY. EBITDA margins were at 80% vs 77% in 1QFY25 and 81% in 4QFY25. Other income came in at INR2.3b, 33% above our estimates due to MTM gains (up 34% YoY and 88% QoQ).

Outlook

We have raised our earnings estimates by 3% each for FY26/FY27, reflecting strong 1QFY26 performance and stable AUM growth. We reiterate our BUY rating on the stock with a TP of INR6,400 (premised on 42x Mar’27E EPS).