HDFC AMC surges 9% after 10% equity change hands via block deals

According media reports, Abrdn Investment Management, promoter of HDFC AMC, is likely to exit the company through sale of the entire 10.2 per cent stake

Shares of HDFC Asset Management Company (AMC) surged 9 per cent to Rs 2,060 in Tuesday’s intra-day trade after 10 per cent of the company's total equity changed hands via block deals.

Till 9:32 am; around 21.85 million shares, which represented 10.2 per cent of HDFC AMC's total equity changed hands on the BSE data shows. The names of the buyers and sellers were not ascertained immediately. Currently, the stock quoted 6 per cent higher at Rs 2,006, as compared to 0.37 per cent decline in the S&P BSE Sensex.

According media reports, Abrdn Investment Management (Formerly Standard Life Investments Limited), promoter of HDFC AMC, is likely to exit the company through sale of the entire 10.2 per cent stake. With this deal, Abrdn will fully exit the company before the merger of the parent company.

After the stake sale, the share will need to gain around 17 per cent to stand a chance for a re-entry into the MSCI Standard Index, according to Nuvama Alternative & Quantitative Research.

HDFC AMC is the investment manager to HDFC Mutual Fund with a closing asset under management (AUM) of Rs 4.37 trillion and total AUM of Rs 4.36 trillion, as of March 31, 2023. Equity-oriented closing AUM accounted for Rs 2.46 trillion, with non-equity-oriented AUM contributing the rest.

The company also provides portfolio management and separately managed account services to HNIs, family offices, domestic corporates, trusts, provident funds, and domestic and global institutions. As of March 31, 2023, aggregate assets under these services were at Rs 1,825 crore.

While the assets under management for mutual funds have almost doubled in five years, the industry will experience tailwinds that are expected to propel future growth, said analysts.

The growing financial literacy among Indian investors, coupled with the need for long-term wealth creation, is expected to drive higher participation in mutual funds. As investors move away from traditional investment avenues, mutual funds offer a convenient and professionally managed alternative.

"The growing popularity of SIPs, with large-scale campaigns is improving outreach.  India's burgeoning middle-class segment, characterised by rising disposable incomes and aspirations present a significant growth opportunity. Emergence and growth of fintech platforms will bring in a large pool of new investors," the management said.

Technical View

Bias: Positive

Target: Rs 2,190

Support: Rs 1,952

Shares of HDFC AMC were seen struggling around the 200-DMA (Daily Moving Average) for most part of this month so far. Today's strong up move may help the stock sustain above the 200-DMA in the near-term, which now stands at Rs 1,952.

As long as the stock holds above the 200-DMA, it may trade with a positive bias and test Rs 2,190 on the upside, which the falling trendline resistance on the weekly chart.

(With inputs from Rex Cano)