A couple of recent developments have worked in favour of the stock. Also, MSCI’s index recast, including the company in MSCI Global Standard index, helped investor sentiment.
In another development, the country’s biggest mutual fund house by assets under management (AUM) last month reported a 79 per cent rise in profit after tax at Rs 368.3 crore in the three months ended September 30, 2019. It had posted a profit after tax (PAT) of Rs 205.9 crore for the year-ago period.
Total income rose by 7 per cent to Rs 549 crore from Rs 515.3 crore in the same period of last financial year.
“HDFC AMC has been able to build a strong brand franchise due to strong parentage and consistent returns in the past with top funds witnessing continuous flows. The company’s persistent focus on garnering high yielding retail AUM has led equity AUM growth to outpace overall AUM growth (27 per cent CAGR vs 24 per cent) in FY14-19,” ICICIdirect said in a report.
KR Choksey Shares and Securities said HDFC AMC delivered a strong set of numbers in Q2FY20 with modest top line growth but healthy improvement in margins backed by lower taxation expenses and lower fees and commission expenses due to regulatory changes.
“We like HDFC AMC for its market leadership position (around 15 per cent market share) supported by a strong brand presence through the HDFC group association. In our view, mutual funds industry in India is underpenetrated and offer long term growth prospects for channeling household financing savings,” the brokerage said in a November 1 report.
It further said mutual funds have been growing at a rate higher than bank deposits growth rate. HDFC AMC is among the unique pure-play investment opportunities to take exposure to the mutual funds in India and a quality asset with a credible track record, superior margin profile and healthy ROEs (>30 per cent).