Analysts raise earnings estimates of HDFC AMC after stellar Q3 show

HDFC AMC reported a 31% year-on-year (Y-o-Y) growth in net profit to Rs 642 crore for the December quarter (Q3), an 11% rise compared to the September quarter

HDFC Asset Management Company (AMC) share price gained 6.45 per cent to Rs 4,112.90 a piece on the BSE during Wednesday’s intraday trade. This came after analysts raised target price and earnings estimates of the company after a stellar growth in Q3FY25.

 

HDFC AMC reported a 31 per cent year-on-year (Y-o-Y) growth in net profit to Rs 642 crore for the December quarter (Q3), an 11 per cent rise compared to the September quarter.

 

Revenue from operations surged 39 per cent Y-o-Y to Rs 934 crore during the period. 

According to analysts at Japanese brokerage firm Nomura, HDFC AMC's operating profit was at Rs 750 crore, up 51 per cent Y-o-Y, and 9 per cent quarter-on-quarter (Q-o-Q). It was better than expected due to higher revenue and lower expenses.

 

Meanwhile, the company's profit after tax (PAT) was 10 per cent ahead of Nomura's estimates. 

Quarterly average assets under management (AUM) grew modestly by 3.8 per cent Q-o-Q, compared to 13 per cent in Q2.

Operating revenue yields also improved marginally to 47.5 bps, driven by the rationalisation of commission expenses implemented in August 2024. 

The company had implemented commission reduction across top 10-12 equity schemes in order to share the impact of lower total expense ratio (TERs) with distributors. 

Analysts believe that commission cuts will provide support to yields in the near term, while yields may become a drag in the long term. 

“We build in 3 per cent annual compression in equity yields over FY2025-27E and a similar decline in overall yields. From a yield perspective, large negative mark-to-market (MTM) creates a drag due to the impact on older funds, with new flows continuing at lower levels,” those at Kotak Institutional Equities said. 

On the upside, analysts also highlighted HDFC AMC’s steady performance across key segments. The company's active equity market share increased by 20 bps Y-o-Y to 12.8 per cent. Its market share of unique individual investors rose by 300 bps at 24 per cent. Meanwhile, the SIP market share fell by 53 bps Y-o-Y and 61 bps Q-o-Q to 14.4 per cent, attributed to a shift in systematic transfer plan (STP) AUM.