HDFC AMC Q3 Results Review - Equity Market Share Gains To Continue: Prabhudas Lilladher

Prabhudas Lilladher Report

We upgrade core earnings for by 10.5%/15.1% led by strong equity monthly average assets under management growth in FY24 year-to-date (+46% for HDFC Asset Management Company Ltd. versus +37% for industry).

The company saw a good quarter yet again. Quarterly average assets under management was a bit lower; revenue was in-line suggesting tad better realization at 48.7 basis points (49 bps in Q2 FY24).

Change in TER slabs for 61% of active equity was offset by increase in equity mix by 2.9% QoQ and fall in debt/liquid, protecting blended yields.

Equity performance within one-year and three-year buckets remains best-in-class which has resulted in strong net flows’ market share of 23% over April-November 2023 (versus 8.6% in FY23).

Hence equity market share at 12.6% further expanded (+26 bps QoQ). Over FY23-26E we see core profit after tax compound annual growth rate of 18.0% (earlier 12.5%). Stock is trading at 34.4 times; rolling forward to FY26E core earnings per share we raise multiple to 39 times from 35 times (five year average of 40 times) since HDFC AMC should continue to deliver better than industry equity returns.

Our target price rises to Rs 3,900 from Rs 3,000. Retain 'Buy'.

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