Buy HDFC AMC; target of Rs 4800: Motilal Oswal

Motilal Oswal is bullish on HDFC AMC has recommended buy rating on the stock with a target price of Rs 4800 in its research report dated March 26, 2025.

Broker Research

March 27, 2025 / 10:48 IST

Buy

26 Aug, 2025 12:21

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Motilal Oswal research report on HDFC AMC

HDFC AMC is India's third-largest mutual fund house with QAAUM of INR7.9t. It holds an overall market share of 11.5% and a 12.8% share in actively managed equity QAAUM, underpinned by strong brand reputation, consistent fund performance, and an extensive distribution network. HDFC AMC operates on a cost-efficient model, driving industry-leading profitability with a PAT-to-AAAUM ratio of 33bp. This lean cost structure supports strong cash generation, enabling a stable RoE of over 30%, significantly outperforming many financial sector peers. The company has witnessed robust retail participation, with SIP AUM growing 38% YoY to INR1.8t as of Dec’24, representing 37% of actively managed equity AUM. Furthermore, HDFC AMC commands a 24% share of unique mutual fund investors, reinforcing its leadership in retail investor penetration.

Outlook

Looking ahead, we project equity AUM growth of 55%/12%/18% in FY25/FY26/FY27. FY26 is anticipated to start on a weaker note in terms of AUM growth. Despite adjustments in commission structures, we factor in a 1bp decline in overall yields for FY26 and FY27. Consequently, we estimate an earnings CAGR of 14% over FY25-27. We maintain our BUY rating on HDFC AMC, with a one-year TP of INR4,800, based on 32x FY27E EPS.

For all recommendations report, click here