HDFC AMC: Nomura maintains 'Buy', cuts target price to Rs 3,050

"Revenue yield increased 1.3bp q-q (vs our expectation of a 0.2bp decline)," Nomura said. Operating revenue was 3.1% above its estimate, while operating PBT yield improved 2 basis points sequentially to 37 basis points as operating expense intensity declined 1 basis point. Quarterly average assets under management (QAAUM) grew 3.6% sequentially and 10% year-on-year, led by 5.8% growth in the equity segment.

Higher revenue yield and controlled staff and non-staff costs drove core PBT growth of 10% sequentially, around 5% above estimates. Net profit after tax (PAT) beat estimates by 6%. Lower AUM growth weighs on estimates Nomura raised its revenue yield assumptions after two consecutive quarters of expansion but expects yields to normalise in the coming quarters. It also factored in lower assets under management (AUM) growth amid weakness in equity markets, resulting in earnings per share (EPS) cuts of 3% for FY27-FY29.

The brokerage said HDFC AMC added 0.6 million unique investors in the quarter, against an industry addition of 1.4 million, increasing its share of unique investors by 40 basis points to 28%. However, its share of systematic transaction flows moderated to 14.8% from 15.1% in the first quarter, largely due to systematic transfer plans (STPs) rather than systematic investment plans (SIPs), according to management.

Nomura reiterates 'Buy' Nomura values HDFC AMC at 32 times September 2028 estimated EPS of Rs 94, compared with 34 times earlier, to arrive at a target price of Rs 3,050. "The stock currently trades at 26x Sep-28F EPS," the brokerage said, adding that intensified competition and declining flow share drove the reduction in its target multiple.