HDFC Asset Management Company (AMC) shares jumped 6 percent on October 16 after strong Q2 FY25 results, with the market capitalisation topping Rs 1 lakh crore for the first time. Improved yields driven by the rationalisation of commissions, steady momentum in equity assets under management (QAAUM), and robust topline growth fueled bullish sentiment around the stock.
HDFC AMC stock was trading at Rs 4,825.5 on NSE in the afternoon, after climbing to the day’s high of Rs 4,849.95. Other AMC shares gained as well, presumably due to the rub on effect. Aditya Birla Sun Life AMC shares jumped over 11 percent to Rs 777; UTI AMC stock was up 6 percent at Rs 1,307; and Nippon Life India AMC share price gained about 5 percent to Rs 741.
Earlier, on Tuesday, HDFC AMC posted a robust 32 percent year-on-year growth in profit after tax (PAT) for the July-September quarter, supported by a 38 percent rise in total income. Its Q2 net profit PAT rose to Rs 577 crore, up from Rs 437 crore in the same quarter last year. Total income surged to Rs 1,058 crore, from Rs 765 crore a year ago.
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The company’s assets under management (AUM) grew by 7.5 percent, reaching Rs 7.58 lakh crore, with notable increases in debt and liquid market share. The company’s equity market share remained stable at 12.9 percent, while its debt market share rose to 13.5 percent, and its liquid market share grew to 12.1 percent.
Brokerage views reflected a mix of optimism and caution. Jefferies maintained its 'Buy' call with a target price of Rs 5,450, saying that the company’s topline growth and yield uptick were significant drivers of growth in profit before tax (PBT). However, the one-time tax outflow linked to legacy gains slightly moderated PAT growth. Jefferies target price implies about 20 percent upside from the previous close of Rs 4,555.
Morgan Stanley, on the other hand, kept an 'Equal-Weight' rating with a lower target price of Rs 4,120, implying about 10 percent downside from yesterday’s close. Analysts said that the operating profit was in line with expectations and PBT beat estimates due to higher other income. But higher tax outflow following the Union Budget 2024 weighed on net profits. Despite this, Morgan Stanley expects that the rationalisation of commissions would lead to higher yields.
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