Top brokerages issued mixed but largely constructive views on HDFC Asset Management Company (HDFC AMC) after the fund house posted a steady performance for Q4FY25, supported by robust equity flows and treasury gains. While Jefferies, Kotak Institutional Equities, and Bernstein remain bullish, Morgan Stanley and HSBC flagged valuation concerns and potential earnings drag from upcoming ESOP-related costs.
Jefferies retained its Buy rating and raised the target price to ₹5,000, noting a 36% YoY growth in operating profit and a 18% YoY growth in PAT to ₹6.4 billion, driven by higher other income. The brokerage highlighted a 26% YoY growth in QAAUM, with equity assets rising 28% to form 64% of the total mix. It cautioned that new ESOP/PSU grants could impact FY26 earnings but maintained a strong medium-term outlook, projecting 14% operating profit CAGR (ex-ESOP) for FY25–28.
Kotak Institutional Equities also maintained a Buy rating with a target of ₹4,500, acknowledging slightly weaker core earnings (~35% YoY) due to lower revenue yields. However, it pointed out that PAT grew 18% YoY thanks to higher treasury gains. The brokerage found valuations still reasonable, supported by improving fund performance and stable operational metrics.
Morgan Stanley, however, remained cautious with an Equal-weight rating and a target price of ₹3,600. It stated that operating profit came in slightly below estimates, as it had assumed better yields based on daily direct TER trends. While investment income was materially higher, MS believes the valuation is full at current levels and chose to keep forecasts unchanged.
Bernstein maintained its Outperform call with a target price of ₹4,760, noting that while weaker markets led to sequential pressure on AuM and fees, management fee income grew 30% YoY, aided by bond market performance. Bernstein noted positively that HDFC AMC is seeking shareholder approval for a new ESOP plan, aimed at broader employee coverage and talent retention, a move it sees as structurally beneficial.
HSBC, meanwhile, retained its Hold rating but raised the target to ₹4,100, stating that while core performance was in line, a PAT beat was driven by treasury gains. The firm noted HDFC AMC’s improving AUM market share, but said that volatile markets and higher ESOP expenses could mute EPS growth in the near term. It flagged current valuations as “punchy.”
At the time of the reports, HDFC AMC was trading at ₹4,200, implying varying degrees of upside potential depending on the brokerage stance.
Disclaimer: The above views are of the broker’s and not the author or the publication’s. Please make any and every investment decision after consulting your financial advisor.
