Citi has issued a sell rating on HDFC Asset Management Company (HDFC AMC), setting a target price of ₹3,600 despite a 45% year-on-year increase in core pre-tax profit (PBT), which came in 2% higher than Citi’s expectations. The company’s mutual fund average assets under management (MF AAUM) grew strongly, up 45% YoY and 13% QoQ, driven by a 63% YoY and 15% QoQ rise in actively-managed equity-oriented AAUM.
Key drivers included robust flows supported by strong performance and a 0.55 bps QoQ yield increase, with a favorable shift towards a high-yielding, actively-managed equity-oriented mix. Additionally, the impact of back book repricing, which reduced distributor payouts on select schemes starting August 2024, had a marginal effect.
However, the market share for actively-managed equity-oriented AAUM declined by approximately 14 bps from June to September 2024, and overall market share trends have stabilized.
HDFC AMC’s current market price (CMP) stands at ₹4,560.00.
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