HDFC Asset Management Company (HDFC AMC) saw a robust surge of more than 5 percent on October 13, with analysts revising their earnings growth projections for the company following the release of strong results for the September quarter.
Brokerages are particularly excited about HDFC AMC’s notable gains in market share during the previous quarter. The company’s active equity market share increased to 12.4 percent, marking a year-on-year (YoY) rise of 90 basis points (bps) and a quarter-on-quarter (QoQ) increase of 30 bps.
It’s also worth noting that the Systematic Investment Plan (SIP) market share stood at 14 percent, reflecting a YoY growth of 300 bps and a QoQ rise of 114 bps. Furthermore, the market share of unique individual investors climbed to 20 percent, marking a YoY increase of 300 bps and a QoQ rise of 200 bps.
HDFC AMC reported a consolidated net profit of Rs 436.52 crore on October 12, which represents a 20 percent YoY increase from Rs 364.5 crore. Additionally, revenue from operations rose to Rs 643 crore, marking an 18 percent increase from the Rs 574.54 crore recorded in the corresponding quarter of the previous fiscal year.
HSBC, which maintains a “hold” recommendation for HDFC AMC, has raised the target price to Rs 2,580. The firm has also adjusted its earnings per share (EPS) estimates for FY24 and FY25, increasing them by 4 percent in anticipation of growth in assets under management. The adjusted EPS estimates also consider slightly lower cost-to-income projections.
However, HSBC did offer a word of caution, noting that a moderation in income yields might lead to slower earnings growth. This is because as a mutual fund scheme grows in size, the market regulator mandates a lower total expense ratio (TER), which indicates the cost an investor would need to manage their portfolio.
As of noon, the stock was trading at Rs 2,886.75 on the National Stock Exchange, reflecting a 4.77 percent increase from the previous close.