HDFC AMC shares set for a 31% upside, MOFSL lists key catalysts 

Shares of HDFC Asset Management Company Ltd are set for a 31% upside, according to brokerage Motilal Oswal Financial Services Ltd. The AMC is a strong player in the mutual fund industry, backed by robust financial performance, steady AUM growth, and a strong retail presence, said the brokerage. 

While short-term market fluctuations pose challenges, the company’s long-term fundamentals remain solid. With an improved market position, a well-diversified product portfolio and digital expansion efforts, HDFCAMC is well-positioned to sustain growth and deliver value to its stakeholders. 

"We expect AUM to grow in mid-teens, while revenue/EBITDA/PAT should record FY26-28 CAGR of 13%/14%/14%. We reiterate our BUY rating on the stock with a TP of Rs 3,200 (premised on 44x FY28E Core EPS)," said MOFSL. 

In the current session, the stock was trading on a flat note at Rs 2425 in the current session. Market cap of the AMCs stood at Rs 1.03 lakh crore. The stock has lost 16% in a year and fallen 9% this year. 

Structural growth drivers remain strong

The long-term growth outlook for the asset management industry remains favourable, supported by rising financialisation of savings, increasing participation from investors in B30 cities and the continued expansion of India’s public-market investor base, said the brokerage. 

With around 62.5 million mutual fund investors compared with an estimated 120–130 million active investors on the NSE, HDFC Asset Management Company (HDFC AMC) has significant scope to deepen its penetration among the existing investor base.

The company has several levers to drive asset inflows beyond market-driven growth in assets under management (AUM). These include sustained fund performance, a strong product portfolio with 13 schemes having track records of more than 15 years, greater penetration of underrepresented product categories, SIP top-ups, higher average investment ticket sizes and an increase in the number of products held by each customer.

Distribution network remains a key strength

HDFC AMC’s extensive distribution network continues to provide it with a competitive advantage. The company is investing across both physical and digital channels, including its physical network, banks, mutual fund distributors (MFDs) and fintech platforms.

While HDFC AMC is working to further strengthen its relationship with HDFC Bank, its strategy is to maintain a broad-based presence across distribution channels. This approach is aimed at ensuring that the AMC can capture emerging growth opportunities irrespective of how investor preferences and distribution trends evolve.

Alternatives and new platforms offer additional growth avenues

The company’s alternatives business presents another potential source of incremental growth. HDFC AMC’s alternatives portfolio has expanded significantly, with the number of products increasing to around 110 from approximately 45 five years ago.

The expansion has been supported by dedicated teams focused on portfolio management services (PMS), private equity and private credit. Additional opportunities are expected to emerge from newer platforms and mandates, including GIFT City, the Specialized Investment Fund (SIF) framework and the Employees’ Provident Fund Organisation (EPFO) mandate.

HDFC AMC’s AUM is expected to grow at a mid-teens rate over the medium term. Revenue, EBITDA and profit after tax (PAT) are projected to record compound annual growth rates (CAGR) of 13%, 14% and 14%, respectively, between FY26 and FY28.