HDFC AMC share price jumps over 5% to record high after strong Q2 results. Should you buy?

HDFC Asset Management Company share price jumped over 5% to hit a record high on Wednesday after the company posted strong earnings for the second quarter of FY25. HDFC AMC shares spiked as much as 5.16% to a fresh high of ₹4,783.75 apiece on the BSE.

HDFC Asset Management Company reported a net profit of ₹576.61 crore in the quarter ended September 2024, a 32% year-on-year (YoY) increase from ₹436.52 crore in the same period last fiscal.

The company’s total income rose 38% to ₹1,058.19 crore in Q2FY25 from ₹765.35 crore in the year-ago period.

Assets Under Management (AUM) of HDFC AMC increased by 7.5%, reaching ₹7.58 lakh crore by the end of Q2. The company’s equity market share remained steady at 12.9%, while its share in the debt market rose to 13.5% from 13.3%.

The QAAUM (Quarterly Average Assets Under Management) in actively managed equity-oriented funds, excluding index funds, amounted to ₹4,67,600 crore for the quarter ending September 30, 2024, representing a 12.9% market share.

Analysts review

“Strong equity markets and inflows have led to a higher share of equity in QAAUM to 65.7% (+810 bps YoY / +140 bps QoQ). This drove up revenue and EBIT by 38% and 47.4% YoY,” said Nuvama Institutional Equities.

The brokerage firm retained a ‘Buy’ rating on HDFC AMC shares and raised the target price to ₹5,240 apiece from ₹4,910 earlier.

Phillip Capital noted that strong AUM growth was driven by buoyant equity markets. It expects equity yield to remain under pressure and can bring down gross yield once its share starts coming off, which are at an all time high level of 65.7%.

“At current price, stock trades at a P/E of 39x/31x on FY25/FY26 earnings; We believe at current price, market is factoring AUM CAGR of c.18-19% for 10 years and hence see limited upside from here,” said Phillip Capital.

It maintains a ‘Neutral’ rating with a revised target price of ₹4,470, valuing it at 30x FY26 earnings.

Kotak Institutional Equities said while HDFC AMC continues to execute well, it finds the stock fairly valued with limited re-rating prospects (returns linked to markets). It retained a ‘Reduce’ rating with an unchanged target price of ₹4,200 for HDFC AMC shares.

It marginally revised earnings upward, valuing the stock at ~30X September 2026E EPS for an earnings CAGR of ~20% over FY2025-27E.

HDFC AMC Share Price

HDFC AMC share price has given decent returns to investors this year. The stock has gained over 7% in one month and more than 16% in three months. HDFC AMC stock price has rallied over 48% year-to-date (YTD) and more than 66% in the past one year period. 

At 10:25 am, HDFC AMC shares were trading 4.87% higher at ₹4,770.05 apiece on the BSE.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.