Accumulate HDFC Asset Management Co; target of Rs 3035: KR Choksey

KR Choksey's research report on HDFC Asset Management Co

QAAUM (Quarterly Average Assets Under Management) was at INR 5,247 Bn as of September 30, 2023, a growth of 22.2% YoY/ 3.0% QoQ. In Q2FY24,revenue stood at INR 6,431 Mn, an increase of 18.1% YoY/ 11.9% QoQ. H1FY24 revenues grew by 14.2% YoY to INR 12,176 Mn. The EBITDA during Q2FY24 was reported at INR 4,822 Mn (excluding other income), which grew by 19.2% YoY/ 12.5% QoQ with margins at 75.0%. In H1FY24, EBITDA stood at 9,108 Mn, a jump of 14.7% YoY with 74.8% margins (+32 bps YoY). Net profit for Q2FY24 grew by 20.2% YoY at INR 4,376 Mn, led by a healthy operating performance during the quarter. In H1FY24, Net Profit grew 34.9% YoY to INR 9,151 Mn.

Outlook

HDFCAMC shares are currently trading at a P/E of 35.4x/30.3x on FY24E/FY25E earnings. We are applying a P/E multiple of 32x on FY25E EPS of INR 94.9 to arrive at a target price of INR 3,035 per share (earlier INR 2,725), an upside of 4.8% over the CMP. We maintain our rating of "ACCUMULATE" on the shares of HDFC AMC.