HDFC AMC shares: Brokerage slashes target price post Q4 results, retains 'Buy' — here's the rationale

Select brokerages have trimmed their target prices for HDFC Asset Management Company (HDFC AMC) following the company’s Q4 performance, while maintaining positive ratings on the stock.

Nuvama Institutional Equities retained its 'Buy' call but reduced the target price to Rs 3,170 from Rs 3,620. The brokerage said strong systematic investment plan (SIP) inflows of Rs 92,900 crore in the March quarter, up 3.3 per cent sequentially, were offset by volatile equity markets. Nifty50 declined 14.5 per cent on a quarter-on-quarter (QoQ) basis, impacting overall asset growth.

As a result, HDFC AMC's equity quarterly average assets under management (QAAUM) grew 22.5 per cent year-on-year (YoY) but declined marginally by 0.2 per cent sequentially. Revenue and EBIT rose 16.7 per cent and 15.7 per cent YoY, respectively. However, weaker other income led to a 2.5 per cent YoY decline in adjusted profit after tax (APAT), which stood at Rs 620 crore.

Operational metrics remained steady. Equity AUM market share stood at 13 per cent, up 20 basis points (bps) YoY and flat sequentially. SIP inflows rose 3.2 per cent QoQ, while SIP market share slipped 6 bps to 15.2 per cent. The share of individual accounts increased by 100 bps sequentially to 27.0 per cent.

Nuvama said mark-to-market (MTM) weakness is expected to weigh on near-term earnings and revised its FY27 and FY28 NOPLAT (Net Operating Profit Less Adjusted Taxes) estimates downward by 14 per cent and 9.5 per cent, respectively. The revised target price implies valuations of 46.8 times and 37.8 times FY27E and FY28E earnings.

Separately, Equirus Securities maintained its 'Long' rating on HDFC AMC but lowered its 12-month target price to Rs 3,000 from Rs 3,150.