HDFC Asset Management Company (HDFC AMC) has delivered outstanding Q2 FY25 results, sending its share price to a record high of ₹4,783.75 on the Bombay Stock Exchange (BSE).
The company’s net profit surged by 32% year-on-year, driven by a strong performance in equity funds and overall market growth. Investors are now wondering if this is the right time to buy HDFC AMC stock.
Q2 FY25 Financial Highlights
- Net Profit: HDFC AMC reported a net profit of ₹576.61 crore for Q2 FY25, compared to ₹436.52 crore in the same period last year, marking a 32% growth.
- Total Income: The company’s total income rose by 38% to ₹1,058.19 crore, up from ₹765.35 crore in Q2 FY24.
- Assets Under Management (AUM): HDFC AMC’s AUM increased by 7.5%, reaching ₹7.58 lakh crore by the end of Q2 FY25.
HDFC AMC Financial Performance (Q2 FY25 vs Q2 FY24)
| Metric | Q2 FY25 | Q2 FY24 | Growth (%) |
|---|---|---|---|
| Net Profit (₹ crore) | 576.61 | 436.52 | 32% |
| Total Income (₹ crore) | 1,058.19 | 765.35 | 38% |
| AUM (₹ lakh crore) | 7.58 | 7.05 | 7.5% |
Performance Drivers
- Equity Growth: HDFC AMC’s equity funds have performed exceptionally well, contributing to the growth in AUM. The company’s market share in the equity segment remained steady at 12.9%.
- Premium Fund Offerings: The company’s focus on premium funds has attracted high net-worth individuals (HNIs) and institutional investors, boosting revenue.
- Steady Debt Market Share: HDFC AMC’s share in the debt market improved slightly from 13.3% to 13.5%, reflecting balanced growth across asset classes.
Analysts’ Reviews
- Nuvama Institutional Equities: Analysts at Nuvama noted that strong equity market inflows and rising QAAUM (Quarterly Average Assets Under Management) have significantly boosted HDFC AMC’s revenue and EBIT, which grew 38% and 47.4% YoY, respectively. They maintained a ‘Buy’ rating, raising the stock’s target price to ₹5,240.
- Phillip Capital: While noting the strong AUM growth, Phillip Capital warned that equity yields may come under pressure due to increased market share. They retained a ‘Neutral’ rating and set a target price of ₹4,470.
- Kotak Institutional Equities: Kotak maintained a ‘Reduce’ rating on the stock, citing limited upside potential despite HDFC AMC’s strong execution. They set a target price of ₹4,200, valuing the stock at 30x FY26 earnings.
Stock Market Reaction
HDFC AMC shares have rallied over 48% year-to-date and more than 66% over the past year. On October 16, 2024, following the release of the Q2 results, the stock rose by 5.16% to a record high of ₹4,783.75 on the BSE.
Investors are clearly optimistic about the company’s growth prospects, although some analysts are cautioning against overvaluation.
Conclusion: Should You Buy HDFC AMC Stock?
While HDFC AMC has posted impressive Q2 results, driven by strong equity market inflows and robust AUM growth, analysts are divided on the stock’s future potential.
Some see further upside, while others warn that the stock might be fairly valued at current levels. Investors should carefully consider their risk tolerance and consult with financial advisors before making investment decisions.
Disclaimer
This article is based on market research and financial data as of October 16, 2024. Please consult your financial advisor for personalized investment advice.