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HDFCAMC’s senior management sounded sanguine about industry growth prospects driven by formalization of the economy. It continues to gain share in unique investor countthat saw healthy 3.3-year CAGR of 33% (industry 16%). Relationship with HDFCB has structurally improved with closer alignment across teams; bank contributes <30% in SIP flows. Alternates business is expected to scale up with most of the hiring done. While 1-year equity performance has weakened, 3-year returns remain strong, which is driving the highest net flow market share of ~12% (Apr-Jul’26). Due to lower industry equity AAuM growth, we cut core PAT by ~4% for FY27/28E each. We tweak multiple to 35x on Mar’28 core EPS and trim TP to INR2,850 from INR3,040. Retain ‘BUY

Optimism in Indian AMC space:

Structural view remains constructive on India given the expanding listed universe (~12,000 companies with >US$25mn revenue, of which 85%+ are PAT positive). Formalization of the economy, drawing more savings into the financial system and low (~0.7%) international allocation to India's INR86trn industry AuM offer a large opportunity. Unique investor count for HDFCAMC has seen a strong 33% CAGR over Mar’23 to Jun’26 from 6.6mn to 17mn (industry CAGR of 16%). There is more growth potential, given MF investor base of 62mn and 130mn+ NSE-registered capital-market investors. Industry SIP ticket size at avg INR3,000 per month can increase materially.

Well-rounded strategy in distribution mix:

HDFCAMC follows a ‘maximize every channel’ strategy, i.e., physical, digital, direct, MFD, ND & bank, though distributor-led AuM shows greater stickiness than direct. Despite 98% of transactions being digital, (5- years ago 69%), the company opened 25 branches on a single day last year, continuing physical expansion in B30 cities. HDFCB’s relationship with HDFCAMC has structurally improved with closer alignment across digital and marketing teams. The bank contributes to <30% of SIP flows and ~6.5% of the equity book. MFDs remain critical even as fintech platforms grow; 65% of new SIPs sourced via fintech come from B30 towns.

Some under-penetrated products suggest growth potential:

While the top-5 schemes contribute 66% to equity (+bal) AuM, the company sees a good runway in underpenetrated funds having a longer vintage; 6 schemes have >30-year track record and 13 have >15-year track record. This can be a durable moat as performance compounds. Regulatory approval for SIF is in the process; new hire, Mr. Paul would lead the platform. Despite more new entrants, market share of top-3/5/10 players has been stable; hence management is not concerned about fragmentation given the scale of opportunity

Alternates business expected to scale up:

Alternatives platform is scaling up well; investment team headcount in PMS, PE & private credit has grown from 2 to 22 persons in 3-4 years (PMS-8, PE-7, private credit-7). Also risk, product, legal and sales support teams have been strengthened. Balance-sheet commitment to alternatives is likely to exceed INR 10bn by year-end; it is expected to grow at a good pace. Company launched its first cat-3 AIF and a NDPMS targeting family offices/UHNIs

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