Shares of HDFC Asset Management Company (HDFC AMC) surged 2 percent to touch an all-time high of ₹5,625 following the announcement of strong first-quarter earnings for FY26. The asset management giant impressed both investors and analysts with its solid performance, backed by healthy revenue growth, rising profits, and expanding assets under management (AUM).
Strong Q1 Performance Boosts Sentiment
For the quarter ended June 30, 2025, HDFC AMC reported a 24 percent year-on-year increase in net profit to ₹748 crore, up from ₹604 crore in the same quarter last year. Revenue from operations also grew by 25 percent to ₹968 crore. One of the key highlights of the quarter was the significant growth in average assets under management, which rose 23 percent YoY to ₹8.3 lakh crore from ₹6.71 lakh crore in the previous year.
This financial strength has propelled the stock up more than 59 percent from its 52-week low of ₹3,525 touched in April 2025. Over the past year, HDFC AMC’s shares have gained around 35 percent, supported by market optimism and consistent business expansion.
Q1 Review
Motilal Oswal Financial Services has reiterated its ‘Buy’ rating on HDFC AMC, assigning a revised target price of ₹6,400 (almost 14 percent upside potential). The brokerage stated that revenue for the quarter came in at ₹970 crore, marking a 25 percent YoY and 7 percent QoQ growth, in line with expectations.
Earnings before interest, taxes, depreciation, and amortisation (EBITDA) rose by 30 percent YoY to ₹770 crore. The EBITDA margin expanded to 80 percent compared to 77 percent a year earlier. Net profit at ₹750 crore surpassed estimates by nearly 9.5 percent, helped by better operating performance and higher other income. Motilal Oswal also noted the company’s application to SEBI for launching Specialised Investment Funds (SIFs), signaling further business diversification. The brokerage raised its earnings per share (EPS) estimates for FY26 and FY27 by 3 percent each.
Global brokerage Morgan Stanley described the quarter as “good,” with HDFC AMC’s PAT exceeding its estimate by 7 percent and the Street’s consensus by 9–10 percent. The outperformance was attributed to better investment income and stronger revenue yields.
While operating profit met expectations, Morgan Stanley highlighted that the revenue yield held up better than anticipated, helped by the continuation of commission rationalisation initiatives undertaken in FY25. The brokerage revised its price target from ₹4,470 to ₹4,910, citing stronger SIP flows and improved yield projections. It also raised its FY26–28 PAT estimates by 2–8 percent and expects profit growth of 19 percent in FY26, down from 27 percent in FY25.
However, despite the optimistic outlook, Morgan Stanley maintained an “Equal Weight” rating due to valuation concerns. “We find valuation expensive at 35x FY27 PE, though this could sustain in the short term on strong investor sentiment,” it added.
Jefferies echoed bullish sentiment, reiterating its “Buy” rating and hiking the target price to ₹6,100 from ₹5,000. The brokerage noted that the Q1 PAT of ₹748 crore beat estimates, aided by better-than-expected core revenues and higher other income.
Jefferies pointed to steady SIP flows, solid inflows in debt and liquid funds, and a rebound in equity markets as key drivers. Equity assets rose 12 percent sequentially, while the market share in equity QAAUM remained stable at 12.8 percent. However, the brokerage cautioned about a potential drag on earnings due to non-cash costs related to employee stock options (ESOPs) and PSU provisioning expected from Q2 onward. This could raise operating expenses by 10–15 percent, though overall employee costs remain low at around 6 basis points of AUM.
Looking ahead, Jefferies expects HDFC AMC to deliver a 16 percent CAGR in operating profits over FY25–28, supported by a 23 percent AUM CAGR. While moderate other income could limit net earnings growth to around 15 percent, the long-term fundamentals remain robust, the brokerage said.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
