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Asset Management Company shares rally up to 7% on HDFC AMC's strong Q3 nos

Shares of HDFC AMC surged 6% to Rs 4,112.90 after the company' profit after tax grew 30.8% annually to Rs 641.8 crore, despite other income declining 34.5% YoY in Q3FY25

Stock Market, BSE, NSE, Nifty, Capital

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Deepak Korgaonkar Mumbai

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Shares of asset management companies (AMCs) have rallied by up to 7 per cent on the BSE in Wednesday’s intra-day trade after HDFC AMC reported a healthy set of numbers for the quarter ended December 2024 (Q3FY25).
 
Shares of HDFC AMC surged 6 per cent to Rs 4,112.90, after the company reported that its profit after tax grew 30.8 per cent year-on-year (YoY) to Rs 641.8 crore, despite other income declining 34.5 per cent YoY, and 54.4 per cent sequentially, to Rs 93 crore owing to mark-to-market (MTM) impact of its equity investments.  Besides HDFC AMC, shares of UTI Asset Management Company have surged 7.4 per cent to Rs 1,271.95 on the BSE in Wednesday’s intraday trade. Nippon Life India Asset Management gained 6 per cent to Rs 673.50, followed by Shriram Asset Management (5 per cent at Rs 507.90) and Aditya Birla Sun Life AMC (4 per cent at Rs 770.35). In comparison, the BSE Sensex was up 0.12 per cent at 76,592 at 01:28 PM.  Coming back to HDFC AMC, the company’s asset under management (AUM) increased 35 per cent annually, and 1 per cent on a quarter-on-quarter (QoQ) basis to Rs 7.8 trillion in Q3FY25, with the company marginally improving its market share from 11.5 per cent to 11.6 per cent during the quarter. 
 
 
Revenue growth was healthy at Rs 934 crore, increasing 39 per cent YoY supported by AUM growth and a marginal improvement in yields. Earnings before interest, tax, depreciation and amortisation (Ebitda) growth was healthy at 50 per cent YoY increase at Rs 764 crore with a strong Ebitda margin of 81.7 per cent for the quarter.
 
According to brokerage firm, ICICI Securities, the company is maintaining its market share, especially on the higher yielding equity side despite its larger size and intensifying competition. Multi-channel distribution network, high equity mix, better profit margins and its parentage shall enable it to command better relative valuation, it added. "Going ahead, synergy benefits of HDFC Bank’s network shall aid the company to capture the underpenetrated Indian mutual fund market," ICICI Securities said in a note.
 
Analysts at InCred Equities, meanwhile, appreciate the strong scheme-wise delivery provided by the company, which, in turn, resulted in a surge in equity funds’ AUM and an improvement in market share. However, the brokerage firm feels that most of the positives are already factored in the stock price and there is a limit to further upside. However, analysts feel that other AMC stocks offer a better risk-reward ratio. 
 
“We retain our Hold rating on HDFC AMC with a lower target price of Rs 4,200 (Rs 4,750 earlier) or ~27x FY26F EPS, largely due to the higher yield pressure that we now expect,” analysts at InCred said in the company's third quarter results update.
     Besides HDFC AMC, shares of UTI Asset Management Company has surged 7.4 per cent to Rs 1,271.95 on the BSE in Wednesday’s intraday trade. Nippon Life India Asset Management gained 6 per cent to Rs 673.50, followed by Shriram Asset Management (5 per cent at Rs 507.90) and Aditya Birla Sun Life AMC (4 per cent at Rs 770.35). In comparison, the BSE Sensex was up 0.12 per cent at 76,592 at 01:28 PM.

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First Published: Jan 15 2025 | 1:59 PM IST

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