JPMorgan downgrades HDFC AMC shares to 'neutral' on concerns of elevated valuations

Shares of HDFC AMC have gain over 25 percent in trade over the past year.

Shares of capital market player HDFC Asset Management Company Ltd (HDFC AMC) posted a smart recovery in trade on Monday, June 16, after sinking five percent in the morning session even as international brokerage JPMorgan downgraded its rating on the firm.

JPMorgan has downgraded HDFC Asset Management Company to a 'neutral' rating, setting a target price of Rs 5,000 per share. This implies a meagre upside of 0.06 percent, indicating that the brokerage expects shares of the firm to remain flat over the next 12 months.

The broking house noted that the firm's stock has already surged 33 percent over the past three months, which left limited room for further upside in the near-term.

At 11 am, the shares of the firm were quoting Rs 4,971.9, eking out gains of 0.05 percent on the NSE, after falling to Rs 4,700 per share, down 5.4 percent.

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Over the past few years, equity inflows have remained strong as a result of factors such as low inflation, stable GDP growth, and supportive policy measures. However, the trend seems to be weakening as JPMorgan observed a slowdown in inflows so far this year. Despite this, SIP flows continue to show resilience, providing medium-term support to the stock.

The brokerage added that current valuations already price in the positives. HDFC AMC is trading at a PE multiple of 37x for FY26 and 33x for FY27, which, according to JPMorgan, limits the scope for meaningful re-rating in the short run.

The firm's standalone net profit rose by 18 percent year-on-year (YoY) to Rs 638 crore in the fourth quarter of FY25, as compared to Rs 541 crore in the same quarter of the previous financial year. The company’s revenue also saw a strong increase, rising 30 percent YoY to Rs 901 crore in Q4FY25, up from Rs 695 crore in Q4FY24.

HDFC AMC is engaged in the business of providing asset management services to HDFC Mutual Fund, as well as alternative investment funds. It also offers portfolio management and advisory services to clients. Over the past year, shares of HDFC AMC have rallied over 25 percent in trade.

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