Buy HDFC AMC; target of Rs 5200: Motilal Oswal

Motilal Oswal's research report on HDFC AMC

3QFY25 operating revenue grew 39% YoY/5% QoQ to INR9.3b (in line with est.). The sequential growth was driven by AUM growth and a 0.7bp QoQ improvement in yield to 47.5bp (1.1bp YoY decline). For 9MFY25, operating revenue grew 37% YoY to INR26b. Total opex grew 7% YoY to INR1.7b (10% lower than est.), driven by 6% YoY growth in employee costs (2% lower than est.) and 8% YoY growth in other expenses (19% lower than est.). Better-than-expected operational efficiency resulted in 49% YoY growth in EBIDTA to INR7.6b (6% beat). EBIDTA margin came in at 81.7% vs. 79.3% in 2QFY25 and 76.2% in 3QFY24. Operational efficiency resulted in 31% YoY/11% QoQ growth in PAT to INR6.4b (6% beat). For 9MFY25, PAT grew 30% YoY to INR18.2b. The management guides to improve its market share and become the leader in the existing product offerings rather than focusing on bringing more new products to the bouquet. Additionally, expenses are expected to grow in the range of 12-15% YoY.

Outlook

We have largely kept our estimates unchanged. We maintain our BUY rating on the stock with a TP of INR5,200 (premised on 42x Sep’26E Core EPS).