HDFC AMC Q2 Results Review - Higher Equity Share Drove Better Yields: Prabhudas Lilladher

Prabhudas Lilladher Report

HDFC Asset Management Company Ltd. saw a strong quarter; while quarterly average assets under management growth was inline (+8.1% QoQ), revenue was a 4% beat to our estimate leading to better blended yields at 49 bps (47 bps in Q1 FY24).

Increase in equity mix QoQ and decline in liquid share were major drivers of superior yields. Company remains a top performer in equity within one-year and three-year buckets while equity market share at 12.3% continues to enhance (+31 bps QoQ).

Retail presence improved suggested by-

1. individual monthly average assets under management higher than industry and

2. larger pie in unique investor additions.

With HDFC Bank Ltd. gaining control post-merger, sales would be boosted due to stronger distribution focus.

A rise of 10% in share of HDFC AMC sales by HDFC Bank could lead to a 4%/5% increase in average assets under management and core profits.

We see a core profit after tax compound annual growth rate of 13.6% over FY23-25E.

Stock is trading at 32 times; we maintain multiple at 35 times (five-year average of 40 times) but as we roll forward to Sep-25E core EPS, our target price increases from Rs 2,800 to Rs 3,000. Retain 'Buy'.

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