Buy HDFC AMC; target of Rs 3020: KRChoksey
KRChoksey is bullish on HDFC AMC has recommended buy rating on the stock with a target price of Rs 3020 in its research report dated July 24, 2020.
July 26, 2020 / 12:56 PM IST
KRChoksey's research report on HDFC AMC
HDFC AMC reported revenue decline of 18.4% YoY/down 13.6% QoQ to INR 411 Cr. • EBIT declined by 15.5% QoQ / 21.1% YoY to INR 303 Cr. PAT improved 21.0% QoQ / 3.6% YoY to INR 302 Cr due to higher other income. PAT margin expanded from 52.5% in Q4 FY20 to 73.5% in Q1FY21. • AUM improved 12.0% QoQ to INR 3,57,500 Cr. out of which 39% are equity oriented and 61% are non-equity oriented (Industry ratio stood at 38:62). Market share of total AUM declined to 14.0% in Q1FY21 from 14.7% in Q1FY20 • Unique investors stood at 5.6 million comprising of ~26% share in the total MF industry • During Q1FY21, there were 3.11 mn Systematic transactions with a value of INR 9.6 bn processed.
HDFC AMC shares are currently trading at a P/E of 41.0x/36.8x on FY21/22E. We expect the premium valuation of the AMC to continue owing to its higher operational efficiency and industry leading AUM metrics. We continue to apply a P/E of 43x on FY22E EPS of INR 70.2 to arrive at a target price of INR 3,020 an upside of 22.6% over the CMP. Accordingly, we reiterate our rating to a “BUY” on the shares of HDFC AMC.
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