Buy HDFC AMC; target of Rs 5000: Motilal Oswal

Buy

Motilal Oswal's research report on HDFC AMC

HDFC AMC’s operating revenue was up 30% YoY/down 4% QoQ at INR9b (in line) in 4QFY25. Yields for the quarter came in at 46.6bp vs. 45.4bp in 4QFY24 and 47.5bp in 3QFY25. FY25 yields stood at INR35b, up 35% YoY. Total opex rose 10% YoY to INR1.7b (5% lower than est.), driven by 12% YoY growth in employee costs (in line) and 6% YoY growth in other expenses (11% lower than est.). 4Q EBIDTA was at INR7.3b, up 35% YoY. EBIDTA margins stood at 81% vs. 77.5% in 4QFY24 and 81.7% in 3QFY25. Other income came in at INR1.2b, 54% above our estimates (down 20% YoY, up 33% QoQ). Higher other income led to a 3% beat in PAT to INR6.4b, up 18% YoY and flat QoQ. PAT margins came in at 70.8% vs. 77.8% in 4QFY25 and 68.6% in 3QFY25. For FY25, PAT grew 26% YoY to INR24.6b. Despite weak market sentiment, industry-level gross SIP flows declined just 2% QoQ in Mar’25 but rose 25% YoY. Management remains optimistic about a pickup in flow trends, noting that the company’s decline in SIP flows was lower than the industry average.

Outlook

We have largely kept our estimates unchanged. We maintain BUY on the stock with a TP of INR5,000 (premised on 40x Mar’27E Core EPS).

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HDFC AMC - 18042025 - moti