HDFC AMC Q3 Review — 'Buy' The Stock Says Motilal Oswal On Improved Yield, Cost Control; Sees 35% Upside

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Motilal Oswal Report

HDFC Asset Management Company Ltd.'s Q3 FY25 operating revenue grew 39% YoY/5% QoQ to Rs 9.3 billion (in line with estimate). The sequential growth was driven by AUM growth and a 0.7 bp QoQ improvement in yield to 47.5 bp (1.1 bp YoY decline). For 9MFY25, operating revenue grew 37% YoY to Rs 26 billion.

Total opex grew 7% YoY to Rs 1.7 billion (10% lower than estimate), driven by 6% YoY growth in employee costs (2% lower than estimate) and 8% YoY growth in other expenses (19% lower than estimate).

Better-than-expected operational efficiency resulted in 49% YoY growth in Ebitda to Rs 7.6 billion (6% beat). Ebitda margin came in at 81.7% versus 79.3% in Q2 FY25 and 76.2% in Q3 FY24.

Operational efficiency resulted in 31% YoY/11% QoQ growth in PAT to Rs 6.4 billion (6% beat). For 9MFY25, PAT grew 30% YoY to Rs 18.2 billion.

The management guides to improve its market share and become the leader in the existing product offerings rather than focusing on bringing more new products to the bouquet. Additionally, expenses are expected to grow in the range of 12-15% YoY.

We have largely kept our estimates unchanged. We maintain our Buy rating on the stock with a target price of Rs 5,200 (premised on 42x Sep’26E Core earnings per share).

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