Buy HDFC Asset Management Company; target of Rs 6638: Deven Choksey

Deven Choksey's research report on HDFC Asset Management Company

Revenue from operations came in at INR 10,260 Mn, up 15.6% YoY and 6.0% QoQ, marginally above our estimate by 1%, supported by higher equity AUM and continued SIP inflows. EBITDA stood at INR 8,007 Mn, up 13.7% YoY and 3.5% QoQ, below our estimate by 3%, due to higher employee and other expenses. EBITDA margin came at 78.0% versus our estimate of 80.7%. PAT was INR 7,181 Mn, up 24.5% YoY but down 4% QoQ, missed our expectations by 3%. PAT margin printed at 70.0%, slightly below our 72.5% estimate. The segmental mix remained equity-heavy with equity-oriented QAAUM forming 65% of total QAAUM, up 70 bps QoQ; this continued preference for equity schemes drove core revenue growth. The geographical mix improved with B-30 cities contributing 19% to total MAAUM (vs 18% last quarter), aiding incremental inflows and retail participation. QAAUM stood at INR 8,814 bn, up 11% YoY / 6% QoQ, giving the company an 11.4% market share in the mutual fund industry. The equity-to-non-equity QAAUM ratio stood at 65:35, materially higher than the industry’s 56:44.The company maintained a 12.9% market share in actively managed equity-oriented AUM.

Outlook

We have rolled forward our valuation basis to Sept’27 estimates. We value HDFC AMC at 40.0x Jun’27 EPS, implying a target price of INR 6,638. HDFC AMC is currently trading at 41.2x FY26E P/E. We reiterate our “BUY” rating on the stock, led by its improving market share and disciplined cost management. The management's strategic emphasis on innovation and talent alignment further strengthens its long-term competitive positioning.