BackHDFC AMC: ICICI Direct downgrades the stock from buy to hold, target price ₹2,500
HDFC AMC witnessed a decline in market share from 14.9% in Q2FY20 to 13.2% in Q2FY21Equity AUM market share also declined from 15.8% in Q2FY20 to 13.6% in Q2FY21
PremiumHDFC AMC reported a mixed performance wherein muted operational performance was supported by one-off other income. AUM growth remained weak with a decline in market share. HDFC AMC witnessed a decline in market share from 14.9% in Q2FY20 to 13.2% in Q2FY21. Equity AUM market share also declined from 15.8% in Q2FY20 to 13.6% in Q2FY21. Given a loss of market share, weak AUM growth and mixed results, ICICI Direct has downgraded the rating of the stock from 'Buy' to 'Hold', with a revised lower price target.
"We remain positive on the strong brand franchise and efficient operational strength, however, would await clarity on AUM trend given launch of new products and diversification of investment style. Therefore, we downgrade the stock from BUY to HOLD with a revised target price of ₹2,500 per share (earlier ₹3,000)," said the report by ICICI Direct.
HDFC AMC stock price has fallen from ₹2,361 to ₹2,287 since Thursday.
Revival of market share will remain key focus area for the AMC. "Launch of new products and introduction of festival offer is adopted to accelerate AUM accretion. In addition, appointment of new fund managers and diversification in investment style is been undertaken," said the report.
Mutual fund industry AUM increased to ₹26.9 lakh crore as of September 2020 compared to ₹24.5 lakh crore as of September 2019, largely led by a pick-up in non-equity inflows. Equity related AUM remained broadly flattish YoY at ₹10.4 lakh crore, leading to a decline in proportion of equity AUM to 39% against 43% in Q2FY20. SIP inflows dipped 6% YoY to ₹7,800 crore though SIP accounts came in a tad higher by 17.2% YoY to ₹3.3 crore.
HDFC AMC's AUM de-grew 3.2% YoY to ₹3,54,400 crore (flattish QoQ), mainly on account of decline in liquid AUM. Equity AUM declined 12.8% YoY (flattish industry growth rate) to ₹1,43,700 crore. Non-equity AUM grew 4.6% YoY, with inflow in debt AUM offsetting outflow in liquid schemes.
Decline in proportion of equity AUM coupled with reduction in credit fund AUM (that is better yield product) led to revenue from operation benign at ₹456 crore, down 8% YoY.
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