HDFC AMC Downgraded By JPMorgan As Core EBIT Estimates Remain Unchanged

JPMorgan downgraded HDFC Asset Management Co.'s rating to 'neutral' from 'overweight' and maintained its target price of Rs 5,000, saying nominal GDP of 10-11%, as well as near-term stabilisation in household asset allocation to equity is driving forecasts.

The stock is trading at 37 times and 33 times FY26 and FY27 PE, which appears fairly valued. JPMorgan's core EBIT estimates for FY26E/27 E remain unchanged.

Equity inflows have held up over the last few years on the back of benign inflation, consistent and supportive GDP and supportive monetary policy, but has been slowing year-to-date.

SIP flows stay resilient, which JPMorgan sees as a medium-term driver of investment case for the stock. "The number of contributing SIP accounts has also increased to 85.6 million. This strength in SIPs underscores the long-term stickiness of investor behavior and reduced sensitivity to short-term market correction. Hence, high multiples PEG is justified," the brokerage said.

It forecasts slower AUM CAGR of 16% over the next three years, due to moderating inflows, which is still robust. "We expect the company to leverage synergies from parent and the bank's merger to enhance distribution channels, which offers medium to long-term AUM growth visibility. A better distribution outcome poses upside risk to our forecasts and is a risk to our downgrade," it said.

JPMorgan forecasts EBIT/AAUM to stay at 37 bps over the next three years with better cost control. "High yielding equity assets make up approximately 64% of AUM, driven by the AMC's strong performance in flagship funds," it said.

Industry-wide equity inflows have been moderating for five months in a row, largely due to profit taking as well as increasing investor caution. May 2025 inflows at Rs 19,000 crore have been the lowest in last 12 month. On the flip side, SIP flows remain robust with May inflows of Rs 26,700 crore.

JPMorgan's June 2026 price target of Rs 5,000 is based on DDM, with 10-year earnings per share of 15% and a cost of equity of 12.4%, implying a fair price to earnings multiple of 33 times FY27E.

Shares of HDFC AMC fell as much as 5.42% to Rs 4,700 apiece. They erased losses to trade 0.60% higher at Rs 4,999.20 apiece, as of 11:50 a.m. This compares to a 0.73% advance in the NSE Nifty 50.

The stock has risen 24.62% in the last 12 months and 19% year-to-date. Total traded volume so far in the day stood at 0.58 times its 30-day average. The relative strength index was at 57.12.

Out of 27 analysts tracking the company, 20 maintains a 'buy' rating, six recommends a 'hold' and one suggests 'sell', according to Bloomberg data. The average 12-month consensus price target implies a downside of 5.5%.