Deven Choksey Research has issued a BUY recommendation for HDFC Asset Management Company Limited (HDFC AMC), highlighting strong operational and financial momentum in the recent quarter. The stock, currently priced at Rs 5,764, carries a 16th October 2025 target of Rs 6,638, implying a potential upside of 15.2%. The underlying thesis rests on persistent retail traction, remarkable market share gains, disciplined expense management, and a robust expansion into new channels and geographies. The company’s performance was fortified by sustained inflows, especially in equities, and its leadership in systematic investment plans (SIPs).

Deven Choksey's BUY Call and Target Levels

Deven Choksey Research Analyst Yogesh Tiwari advocates a BUY rating on HDFC AMC, assigning a target price of Rs 6,638, compared to the prevailing market price of Rs 5,764. The brokerage projects a 14.6% revenue CAGR and a 15.5% PAT CAGR between FY25 and FY27. The company is currently valued at a P/E of 41.2x FY26E, with an impressive 40x valuation multiple on projected June 2027 earnings.

Q2 Performance: Financials Reflect Robust Growth

HDFC AMC delivered a resilient set of numbers for Q2FY26: - Revenue from operations grew 15.6% YoY to Rs 10,260 Mn, marginally beating street estimates, powered by higher equity AUM and robust SIP inflows. - EBITDA registered a 13.7% YoY advance, despite a drag from employee and other administrative costs; margin stood at a healthy 78%. - PAT soared 24.5% YoY to Rs 7,181 Mn, and PAT margin finalized at 70%, just trailing estimates due to elevated tax costs. - The company maintained its equity-centric focus, with equity-oriented QAAUM forming 65% of aggregate QAAUM, surpassing industry standards.

Market Share Dynamics and Segmental Strength

- HDFC AMC commands an 11.4% stake in total mutual fund industry QAAUM and upholds 12.9% in actively managed equity-oriented assets. - Total QAAUM rose 11% YoY to Rs 8,814 Bn, propelled by resilient retail flows, particularly systematic investments. - The geographical footprint continues to widen, with B-30 cities contributing 19% of total MAAUM, supporting further incremental retail gains.

Retail Franchise: Expanding Investor Engagement

- Individual investors comprise 70% of HDFC AMC’s total MAAUM for September 2025, far outpacing the industry average of 61%. - The firm succeeded in onboarding 0.8 Mn new customers in Q2, representing half of all industry additions, raising its unique investor base to encompass 25% of national mutual fund folios. - The SIP book breached Rs 45.1 Bn in September monthly flows, powered by over 13 million transactions, evidencing deepening retail engagement through 280 offices and a vast partner network.

Industry Context: Mutual Fund Sector Resilience

- India’s mutual fund industry AUM attained Rs 75.6 Tn with 13% YoY growth, despite brief market tremors and negative Nifty 50 returns on a one-year window. - Equity-oriented AUM climbed 10% YoY to Rs 43.7 Tn, fueled by strong net inflows and SIP expansion. - Diversification continued apace, with gold and silver ETFs capturing Rs 28 Bn of net inflows, underscoring investor appetite for low-correlation assets.

Valuation, Outlook, and Risk Factors

- The report estimates revenues to progress from Rs 34,980 Mn in FY25 to Rs 53,474 Mn by FY28, with incrementally expanding EBITDA and PAT margins. - Key risks include escalating employee and administrative expenses, regulatory shifts affecting asset management companies, market volatility, and aggressive competitive moves in lower-yield asset classes. - Notable strengths include active management, talent alignment, digital enablement (with 94% transactions now electronic), and broad outreach courtesy of B-30 city investments and ESG focus.

Shareholding Pattern Table

Key Financials Table (Select Years)

Investment Rationale and Strategic Outlook

- Deven Choksey’s conviction stems from HDFC AMC’s deft navigation of market volatility with sustained flows into equity schemes, remarkable SIP expansion, and aggressive retail onboarding. - The strategic thrust into newer geographies, digital enablement, and alternatives (AIFs, PMS), coupled with robust margin architecture and superior asset quality, crystallizes the medium-term growth trajectory. - Investors should position for the Rs 6,638 target, monitoring quarterly progress, with downside protection driven by sector leadership and deep retail franchise.

Bottomline for Investors

The research underscores HDFC Asset Management Company Ltd. as a bellwether, primed for further upside amid retail-driven growth and innovation-led resilience. The recommendation is a BUY, reflecting confidence in the company’s ability to outpace sector expansion, magnify operating margins, and create sustainable shareholder value. Investors are urged to remain cognizant of cyclical risks and focus attention on continued strategic execution before new highs are realized.