“Migration to financial savings, strong distribution and a consistent performance are expected to enable healthy AUM growth and maintain leadership. Strong operating efficiency, higher proportion of equity AUM and strong SIP flows would aid profitability,” say analysts ICICI Securities.
Given HDFC AMC’s strong positioning and superior earnings profile, the business deserves a premium valuation, the brokerage firm said in a result update.
“In our view, mutual funds industry in India is underpenetrated and offer long term growth prospects for channelizing household financing savings. In fact, mutual funds have been growing at a rate higher than the bank deposits growth rate. HDFC AMC
is among the unique pure-play investment opportunities to take exposure to the mutual fund industry in India and a quality asset with a credible track record, superior margin profile and healthy ROEs (>30 per cent),” analyst at KR Choksey Shares and Securities said in result update.
The stock, however, was trading above the brokerages' 12-month target price of Rs 3,040 and Rs 3,256 per share, respectively.