HDFC AMC shares hit fresh record high after strong Q1 results; should you buy or sell stock?

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Published: July 17, 2019 12:01:03 PM

Shares of India's largest asset management firm HDFC AMC surged to fresh record high on Wednesday morning, after the firm reported robust earnings for the April-June quarter.

HDFC snaps up Apollo Munich Health for Rs 1,347 crHDFC Asset Management Company shares zoomed more than 6% intra-day to hit an all-time high of Rs 2,127.85.

Shares of India’s largest asset management firm HDFC AMC surged to fresh record high on Wednesday morning, after the firm reported robust earnings for the April-June quarter. HDFC Asset Management Company shares zoomed more than 6% intra-day to hit an all-time high of Rs 2,127.85. HDFC AMC has reported a 42% rise on-year rise in net proft to Rs 291.79 crore as against Rs 205.26 in the same quarter of the previous year, the company said in a regulatory filing. The total income surged to Rs 552.75 crore as against Rs 501.19 crore in the corresponding period of the previous financial year. Notably, the AUM surged 18% to Rs 3,56,700 crore.

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Taking stock of the robust results, global brokerage firm Morgan Stanley said the company’s net profit numbers were ahead of estimates and the operating profit margin expansion in recent quarters has surprised. Notably, the operating profit from core asset management business increased 44% to Rs 381.50 crore in Q1FY20 as compared to Rs 264.70 crore in the previous fiscal year. Morgan Stanley expects margin benefit from shift to full trail commission model to take longer to unwind. Morgan Stanley has maintained an ‘overweight’ view on the stock, raising the target price to Rs 2,300 from Rs 2,000 earlier. 

Notably, BofAML has maintained a ‘buy’ recommendation on HDFC AMC shares. The brokerage firm has raised the target price to Rs 2,200 from Rs 1,850, noting that the June quarter results were robust on accout of margin improvement. The total expenses of HDFC AMC declined sharply to Rs 122.86 crore during the quarter under review against Rs 206.55 crore in the comparable period previous year. AUM in actively managed equity oriented funds grew to Rs 1,68,900 crore as on June 30, 2019. The firm has a market share of 16.2% as at the end of the first quarter.

(Please consult your financial advisor before taking any investment related decision)

 

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