This HDFC Group Stock Is Worth Buying, Says India's Top Equity Broking House

Prabhudhas Lilladher, a top stock broking firm believes that the share price of HDFC Asset Management Company Ltd (HDFCAMC) would rally by approximately 16.86%. The brokerage set a target price of Rs 2,100 per share, it was derived at after the brokerage did a coverage on asset management companies. Here are the details.

The brokerage observed that Indian AMC space is underpenetrated compared to its global peers since, assets under management (AUM) to GDP ratio is much lower at 16% for India than world average (63%) and US (140%). Mutual funds AUM as a percent of bank deposits was 22% in Dec 22 compared to 100%+ for USA. Moreover, 41% of household savings are invested in financial assets of which majority is in cash, while MF allocation is merely roughly 2%.

Prabhudhas Lilladher is constructive on Indian AMC space, its slated to grow at 13-15% CAGR; operating yields will improve. Led by low penetration and buoyant equity markets, MF closing overall/equity AUM saw a 19%/25% CAGR over FY15-22 and moved up from Rs11tn/Rs4tn
to Rs 38 trillion /Rs18 trillion.

HDFC AMC is once such firm which the brokerage feels that it is regaining its lost ground and hence the share price of this AMC will grow. " We initiate coverage on HDFCAMC with 'BUY' rating, as it is regaining lost ground, since market share at 11.5% is improving led by consistent superior performance resulting in improved net flows. Post-merger, HDFCAMC could gain more share of gross MF sales by HDFCB, as currently it accounts for only 25% (peers at 70-98%). Better asset mix and cost control led to healthy profitability with operating yields at 36bps which should sustain. Valuation is at 22.5x FY25E core EPS; we assign a multiple of 27x to arrive at target price of Rs 2,100 peer share.

HDFC AMC is one of India's largest mutual fund managers with Rs 4.5 trillion in assets under management. It was established in 1999, as a joint venture between Housing Development Finance Corporation Limited ("HDFC") and abrdn Investment Management Limited (erstwhile known as Standard Life Investments Limited). Its current market capitalisation is Rs 38,393.38 crore.

The last closing price of HDFC AMC stock is Rs 1799.25 per share, it was up by 0.13% on intraday basis. Its 52-week high is at Rs 2,479.25 per share and 52-week low is at Rs 1,690.65 per share. In one year the share price was down by 14.39 %, and in three years, it fell by 38.36%.

Disclaimer:
The stocks have been picked from the brokerage report of Axis Securities, Greynium Information Technologies and the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.