Buy HDFC Asset Management Co; target of Rs 4005: KR Choksey

KR Choksey is bullish on HDFC Asset Management Co has recommended buy rating on the stock with a target price of Rs 4005 in its research report dated January 17, 2024.

Broker Research

January 17, 2024 / 22:06 IST

Buy

26 Aug, 2025 12:21

Volume

Todays L/H

KR Choksey's research report on HDFC Asset Management Co

QAAUM (Quarterly Average Assets Under Management) were at INR 5,515 Bn as of December 31, 2023, a growth of 24.0% YoY/ 5.1% QoQ. The equity-oriented AUM to non-equity-oriented AUM ratio stood at 61:39 as of December 31, 2023, compared to the industry ratio of 53:47. • In Q3FY24, revenue stood at INR 6,713 Mn, an increase of 20.0% YoY/ 4.4% QoQ, despite a slight dip in yields. A resilient growth in AUM led to an increase in revenues. 9MFY24's revenues grew by 16.2% YoY to INR 18,889 Mn. • The EBITDA for Q3FY24 was reported at INR 5,114 Mn (excluding other income), which grew by 23.8% YoY/ 6.0% QoQ with margins of 76.2%. Higher revenues and flat operating expenses during the quarter drove the sequential growth. In 9MFY24, EBITDA stood at 14,222 Mn, a jump of 17.8% YoY with 75.3% margins (+103 bps YoY). • Net profit for Q3FY24 grew by 32.6% YoY/11.9% QoQ to INR 4,897 Mn, led by a robust operating performance during the quarter. For 9MFY24, net profit grew 34.1% YoY to INR 14,048 Mn on the back of 17.8% operating profit growth and higher other income.

Outlook

We have introduced FY26E estimates and have rolled over our valuation accordingly. We expect Revenues/ EBITDA/ PAT to grow at 14.0%/14.7%/16.5% over FY23-26E. HDFCAMC shares are currently trading at a P/E of 39.5x/35.0x/32.6x on FY24E/FY25E/FY26E earnings. We are applying a P/E multiple of 38x on FY26E EPS of INR 105.5 to arrive at a target price of INR 4,005 per share (earlier INR 3,035), an upside of 16.6% over the CMP. We upgrade our rating from "ACCUMULATE“ to “BUY” on the shares of HDFC AMC.

For all recommendations report, click here