Buy HDFC Asset Management Company; target of Rs 3000: Prabhudas Lilladher

Prabhudas Lilladher's research report on HDFC Asset Management Company

HDFC AMC at its analyst meet sounded optimistic on growth potential of India’s AMC space, drawing parallels to journey of US markets from 1980s to 2000s. India has ~570mn PAN cards, while unique investors are 40.4mn suggesting only 7% penetration. HDFC AMC will be a dominant player in this growth journey. Superior performance over the last ~3 years (1-yr bucket) has led to gains in equity market share which further improved to 12.3% (+31bps QoQ). Net flows will be boosted due to stronger distribution focus, as engagement with HDFCB has materially increased post-merger. A rise of ~10% in share of HDFCAMC sales by HDFCB could lead to a ~5% increase in AAuM and core profits. We see a core PAT CAGR of 12.6% over FY23-26E.

Outlook

Stock is trading at 32.2x; we maintain our multiple at 35x on Sep’25E core EPS (5-yr avg. of 40x) and keep TP unchanged at Rs3,000. Retain ‘BUY’.

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