AMC stocks rally up to 11% after HDFC AMC Q2 beat

The shares of listed asset management companies (AMCs) rallied up to 11% after HDFC Asset Management Company declared its Q2 results. Aditya Birla Sun Life AMC shares went up 11% whereas that of Nippon Life India Asset Management rose by 4%.

HDFC Asset Management Company reported 32% year-on-year (YoY) growth in profit after tax (PAT) to Rs 576.61 crore for the three months ended September 2024. The profit after tax (PAT) stood at Rs 436.52 crore in the same quarter of the preceding financial year (FY24).

Revenue of the HDFC AMC for the quarter climbed 38% to Rs 887.2 crore, compared to Rs 643 crore a year ago. Its total income rose 38% to 1,058.19 crore in the July-September quarter from Rs 765.35 crore in the year-ago period.

The assets under management (AUM) of HDFC AMC grew by 7.5%, standing at Rs 7.58 lakh crore as of the end of the September quarter. The company’s market share in the equity segment remained stable at 12.9%, while its share in the debt market increased to 13.5% from 13.3%.

According to a report by JM Financial, HDFC AMC is well placed to benefit from sustained strong MF inflows, with AUM growth, now in the book. Further, it has maintained a strong SIP inflow market share at 15.0% in 2Q25, up 100 bps YoY, and grown unique investors ahead of the industry (11.8mn in 2Q25, +49.4% YoY).

“The stock currently trades at 39x/35x FY25e/FY26e EPS of INR 116/130. Given the robust performance in larger schemes — beating their benchmarks over 3-year and 5-year buckets, and best-in-class PAT yields, we now value HDFC AMC at 40x FY26e EPS with a target price of INR 5,200,” said JM Financial in its report.

The value of new business (VNB) for H1 rose 17% to Rs 1,656 crore, reflecting the company’s focus on writing profitable business. "The private sector and overall industry maintained strong momentum in Q2, growing by 24% and 21%, respectively, on an individual weighted received premium basis in H1FY25. We outperformed the private sector by growing 28% during this period, with a 19% growth on a two-year CAGR basis," said Vibha Padalkar, MD and CEO of HDFC Life.

As per the management, HDFC AMC has healthy share in new customer additions in lumpsum as well as systematic categories. Unique investor share for the company increased from 23% in Q1FY25 to 24% in Q2FY25, according to a report by ICICI Securities.

The report highlighted that HDFC AMC’s Q2FY25 AAUM increased 13% QoQ to Rs 7.6 trillion driven by a sharp 15% QoQ increase in equity AAUM. Debt AAUM increased 9% QoQ while liquid AAUM increased 5% QoQ. In Q2FY25, on a blended basis, yield increased to 46.8bps from 46.2bps in Q1FY25. The increase in yields was helped by a higher equity mix (60 bps QoQ) and selective rationalisation of brokerage from 1 Aug’24.

“Upside potential exists basis strong periods such as FY24/H2FY25 (40%/25% end-to-end AUM growth for HDFC AMC), better flows on the back of improved fund performance, an invigorated HDFC Bank channel post-merger and growth in systematic investments. Downside risk could stem from any regulatory cut in TERs,” said ICICI Securities in a report.