HDFC AMC - Q1FY21 Result Update - ICICI Securities

HDFC AMC reported a steady performance in the current scenario. Recovery in equities led to a revival in AUM. However, a decline in market share remains a drag. Recognition of full impact of volatility in Q1FY21 led to a decline in topline offset by lower opex and higher other income. Industry AUM increased to Rs. 25.5 lakh crore as of June 2020 compared to Rs. 22.3 lakh crore as of March 2020, largely led by a pick-up in equity markets. Equity related AUM grew from Rs. 8.3 lakh crore in March 2020 to Rs. 9.8 lakh crore. However, proportion of equity AUM stayed broadly flat at 38%. Debt, liquid schemes saw healthy traction at ~4%, ~19% QoQ increase to Rs. 8.1 lakh crore, Rs. 4.9 lakh crore, respectively. SIP inflows dipped 8.1% QoQ to Rs. 7900 crore, though SIP accounts were a tad up 3.5% QoQ to Rs. 3.2 crore.

Valuation & Outlook

Amid recent market uncertainty and heightened competition, the company witnessed continuous contraction of AUM market share from 16.2% in Q1FY20 to 14.3% in Q1FY21. Furthermore, the SIP book is also dwindling from its peak inflows since Q1FY20. As HDFC AMC is the market leader, a faster decline of market share compared to industry pace does not bode well. Thus, a market share revival remains the key focus area, going forward. However, as HDFC AMC has been able to build a strong brand franchise due to strong parentage and delivered consistent returns in the past, it deserves a premium valuation. Given business model with least credit risk, long term growth potential and strong fundamentals, we remain positive on the stock. Thus, we maintain our target price at Rs. 3000/share and BUY recommendation on the stock.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_HDFCAMC_Q1FY21.pdf

Shares of HDFC Asset Management Company Ltd was last trading in BSE at Rs.2501.8 as compared to the previous close of Rs. 2504.85. The total number of shares traded during the day was 47159 in over 3945 trades.

The stock hit an intraday high of Rs. 2526.85 and intraday low of 2476.85. The net turnover during the day was Rs. 118176967.

Source : Equity Bulls

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