Add HDFC Asset Management Company Ltd For Target Rs 3,200 by InCred Equities
Consistent yields; attractive valuation
* 2QFY27 PAT stood at Rs7.5bn, missing our estimate, due to lower-thanexpected treasury gains partly offset by higher yields.
* Revenue yield inched up 1bp QoQ to 47bp, supported by a favourable AUM mix. Core PBT beat estimate, driven by higher yields and lower opex.
* Stable yields support the outlook; we remain watchful on inflow market share. Attractive valuation at a 14% discount to peers; retain ADD with a Rs3,200 TP.
PAT down on lower treasury gains partly offset by higher yields
HDFC AMC reported 2QFY27 PAT of Rs7.5bn, up 4% YoY but down 11% QoQ, missing our estimate, due to lower-than-expected treasury gains. Core PBT beat our estimate at Rs9bn, up 10% QoQ and 16% YoY, supported by a 1bp QoQ rise in yields to 47bp led by a favourable AUM mix, with equity funds’ share rising to 63% from 61% QoQ, and lower opex due to lower CSR expenses.
QAAUM grows ~10% YoY & 4% QoQ to Rs9.7tr; favourable AUM mix
QAAUM grew by ~10% YoY and 4% QoQ to Rs9.7tr, led by healthy growth in equity QAAUM. Overall QAAUM market share declined, for the second consecutive quarter, by 10bp QoQ to 11.1%. Active equity funds’ market share fell 10bp QoQ & 20bp YoY to 12.7%, reflecting some softness in net flows for select schemes, while debt funds’ market share rose by 10bp QoQ but declined 20bp YoY to 13%. Equity QAAUM grew by 14% YoY & 6% QoQ, largely supported by Mark-To-Market (MTM) gains, as there was some softness observed in net flow market share for select schemes. SIP/STP inflows remained flat over Jun 2026 but grew by 6% YoY to Rs48bn, while SIP AUM remained flat QoQ at Rs2.3tr. Debt fund AUM declined 2% YoY and 13% QoQ. Among Alternative Investment Funds (AIFs), PMS AUM stood at Rs6.9tr, including Rs71bn of non-discretionary assets, with the company commencing management of Employees Provident Fund Organisation and Seamen’s Provident Fund Organisation mandates worth Rs6.8tr, up from Rs50bn QoQ. AIF commitments stood at Rs40bn, highlighting its growing focus on the non-MF segment.
Lower opex led by a decline in CSR expenses
Employee expenses declined by 1% QoQ and rose 14% YoY due to sequentially lower ESOP expenses, with the headcount remaining flat. Other operating expenses fell 8% QoQ and 6% YoY, primarily due to lower CSR expenses.
Outlook and valuation - compelling valuation, maintain ADD rating
HDFC AMC continues to maintain consistent leadership in equity and equity-oriented schemes. It is noteworthy how the company continued to maintain stable yields through a favourable mix and selective rationalisation of distribution payouts. We remain watchful on inflow share and market share movement; maintain ADD rating on the stock with a stable target price of Rs3,200, valuing it at 37x FY28F core EPS. The stock remains attractive, trading at a ~14% valuation discount to larger peers. Downside risks: Slower inflow and yield pressure.
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