01-01-1970 12:00 AM | Source: ICICI Direct
Hold HDFC Asset Management Company Ltd For Target Rs.3150 - ICICI Direct
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Steady performance; market share to be watched…

About the stock: HDFC AMC is among the largest and profitable mutual funds with a AUM of | 4.18 lakh crore as on June 2021.

* Market share as on Q1FY22 was at 12.4%

* Strong distribution network with 227 branches and over 70,000 empanelled distribution partners

 

Q1FY22 Results: HDFC AMC reported a soft quarter.

* AUM up 17% YoY, 5.9% QoQ to | 4.18 lakh crore, equity AUM up 9% QoQ

* Revenue from operations flat QoQ at | 507 crore; yields down 3 bps QoQ

* PAT up 9% QoQ (14.3% YoY) to | 345 crore, primarily led by higher one-off other income at | 101 crore

 

What should investors do?

HDFC AMC share price has grown over 70% since its listing in August 2018.

* We maintain HOLD rating on the stock

Target Price and Valuation: We value HDFC AMC at ~43x FY23 EPS to arrive at a target price of | 3150 per share.

 

Key triggers for future price performance:

* Strong brand franchise, distribution strength and operational capabilities

* Continued decline in market share is concerning; new product launches to aid AUM growth

* Competitive pressure & passive products to limit yield expansion

* Premium valuations to continue amid AUM growth & superior operational efficiency.

 

Alternate Stock Idea: Apart from HDFC AMC, in our coverage we like MCX.

* MCX is a leader in commodity derivative exchanges in India with over 96% market share in commodities future space as on FY21

* BUY with target price of | 2000

 

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