HDFC Asset Management Company has drawn a ‘Buy’ rating from Nuvama. The brokerage house has set a target price of Rs 3,170 implying an upside of about 19% from current levels.
HDFC AMC’s latest result update points to steady earnings despite weak equity markets in the March quarter, where strong systematic investment plan inflows of Rs 92,900 crore in the quarter supported assets under management growth even as mark to market losses weighed on profitability. Nuvama trimmed estimates for FY27 and FY28 but maintained its positive stance, citing resilient flows, stable yields and tight cost control as key drivers of earnings visibility.
Nuvama on HDFC AMC: Stable flows hold ground despite market drag
Nuvama said HDFC Asset Management Company delivered revenue of Rs 1,051.5 crore in the March quarter of FY26, rising to Rs 1,051.5 crore from Rs 901.4 crore in the same period last year, while earnings before interest and tax came in at Rs 825.7 crore versus Rs 713.6 crore a year ago. The firm noted that profit after tax slipped to Rs 622.7 crore from Rs 638.5 crore during the same period, largely due to a sharp drop in other income amid volatile markets.
The brokerage attributed the resilience to sustained inflows through systematic investment plans and a strong retail participation base. Equity quarterly average assets under management rose to Rs 6,04,700 crore in the March quarter of FY26 from Rs 4,93,800 crore in the March quarter of FY25, even as sequential growth remained muted due to market corrections.
Nuvama said that industry-wide systematic investment plan flows remained robust, with quarterly flows touching Rs 92,900 crore, which helped cushion the impact of falling markets. The firm added that overall quarterly average assets under management growth stood at 19.8% year on year, reflecting continued investor participation despite volatility.
“Robust industry SIP flows drove inflows, offset by equity market weakness leading to moderate growth in assets under management,” Nuvama said.
The brokerage also pointed to stable yields across asset classes, noting that any perceived decline during the quarter was largely due to accounting factors rather than pricing pressure.
“Yields across asset classes remained stable during the quarter, and any perceived decline was due to accounting for fewer days rather than actual compression,” Nuvama said.
HDFC AMC: Cost discipline and margins support earnings Nuvama emphasised that cost management remained a key support for profitability even as revenue growth slowed sequentially. The firm said operating profit margin came in at 78.2% in the March quarter of FY26, compared with 78.9% in the March quarter of FY25.
The brokerage noted that disciplined expense control helped the company maintain earnings momentum despite softer income from treasury operations. Earnings before interest and tax rose to Rs 825.7 crore in the March quarter of FY26 from Rs 713.6 crore in the March quarter of FY25, showing resilience in the core business.
It added that regulatory changes linked to total expense ratio are expected to have a limited impact, as the company plans to offset the effect through commission adjustments and tighter cost controls.
“The company plans to offset regulatory impact through commission optimisation and cost management, resulting in minimal net effect on profitability,” Nuvama said.
HDFC AMC: Strong investor base and SIP book help
Nuvama highlighted that the company continues to gain traction among individual investors, with the number of unique investors rising to 1.67 crore in the March quarter of FY26 from 1.32 crore in the March quarter of FY25.
The brokerage said the monthly systematic investment plan book grew to Rs 4,880 crore in the March quarter of FY26 from Rs 3,650 crore in the March quarter of FY25, indicating sustained retail participation.
It added that the company’s market share in active equity assets remained stable at 13.0% during the quarter, reflecting consistent performance across categories.
“Equity inflows remained resilient even during periods of market decline, with higher flows observed during months of significant volatility,” Nuvama said.
The brokerage also pointed to digital adoption as a structural support, noting that nearly all transactions are now executed through digital channels, which has improved efficiency and reduced costs.
“Digital adoption has significantly improved, with around 97% of transactions now conducted digitally,” Nuvama said.
Nuvama on HDFC AMC: Revise estimates lower
Nuvama revised its estimates downward following market volatility, cutting projected adjusted profit for FY27 to Rs 2,890.1 crore from earlier expectations, and for FY28 to Rs 3,572.7 crore.
Despite the revisions, the brokerage maintained its ‘Buy’ rating, valuing the stock at 46.8 times and 37.8 times its estimated earnings for FY27 and FY28 respectively.
The firm said the reduction in target price to Rs 3,170 from Rs 3,620 reflects lower earnings assumptions rather than any structural concern in the business.
“With mark to market weakness, estimates have been revised, but core earnings drivers remain intact,” Nuvama said.
Conclusion
Nuvama’s latest note on HDFC AMC makes a simple case. Market swings have dented near-term profitability, yet the core business of HDFC Asset Management Company continues to hold up through steady inflows, a growing investor base and disciplined costs.
Disclaimer: The investment details and target prices mentioned are based on a brokerage report by Nuvama and do not constitute an offer or solicitation by this publication. Market investments are subject to significant risks; readers are advised to consult a SEBI-registered investment advisor before making any financial decisions based on these projections. Past performance of systematic investment plans (SIPs) or specific stocks is not a guarantee of future returns.
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