Add HDFC Asset Management Ltd For Target Rs.3,103 - Yes Securities
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HDFC AMC is working on all areas which can lead to enhanced market share
Result Highlights
* Revenue: Revenue from operations at Rs 5423mn was up 7.0%/18.9% QoQ/YoY, somewhat outpacing the growth of QAAUM of 5.3%/16.9% QoQ/YoY
* Share of Equity in AUM: Share of Equity in AUM (including Hybrid funds) at 44.2% was up 160 bps QoQ and 510 bps YoY
* Share of B-30 in AUM: Share of B-30 in AUM at 15.4% was up 50 bps QoQ and 120 bps YoY
* Channel mix: Share of Banks, MFDs, NDs and Direct channel was 13.4%, 41.8%, 23.7% and 21%, respectively in Equity AUM
* Operating profit margin: Operating profit margin for the quarter, at 75.8%, was up 68 bps QoQ and down -431 bps YoY.
Our view –
HDFC AMC is working on all areas which can lead to enhanced market share Management outlined a well-thought out strategy of enhancing market share:
Management stated that market share loss was on account of (1) HDFC AMC being selective with NFOs in the face of irrational pricing, which it expects to subside (2) Lack of thematic / sectoral funds, which it is now addressing (3) A general pressure on top players in an environment of broad-based fund allocation, among other factors.
Revenue growth outpaced QAAUM growth on the back of higher share of equity in AUM: At the same time, Total Expenses growth YoY outpaced Revenue growth, given last year had a particularly low base from a cost perspective.
We maintain ‘ADD’ rating on HDFCAMC with a revised price target of Rs 3103: We value HDFCAMC at 38x FY23 P/E for an FY21-24E EPS CAGR of 16.1%.
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