HDFC AMC extends losing streak to 4th straight month; is it still a stock worth buying?

HDFC Asset Management Company (AMC) has been in a corrective phase for four straight months since November 2024, in line with the broader market trends. The stock has declined nearly 15 per cent during this period, marking a prolonged period of underperformance.

In the past two months alone, the stock has dropped almost 13 per cent, with a fall of over 5 per cent so far in February and around 8 per cent in January. Before that, it lost 0.12 per cent in December and 2.2 per cent in November. Over the last year, HDFC AMC stock has seen a more moderate decline of over 3 per cent.

Just in today’s trading session, the stock declined 3 per cent to touch a day’s low of ₹3,648.25. The stock now trades 25 per cent below its all-time peak of ₹4,862, recorded in October 2024, though it remains 7 per cent above its 52-week low of ₹3,419, registered in June 2024.

Financial Performance: Robust Growth Amid Market Volatility

Despite the stock’s underperformance, HDFC AMC has reported a strong financial performance. The company posted a 31 per cent year-on-year (YoY) increase in net profit to ₹641 crore for the quarter ending December 31, 2024. Revenue from operations for Q3FY25 rose to ₹935 crore, reflecting a 39 per cent growth compared to ₹671 crore reported during the same quarter in the previous financial year.

Additionally, operating profit (EBITDA) surged to ₹763 crore from ₹509 crore, with the EBITDA margin expanding significantly to 81.7 per cent from 75.9 per cent. HDFC AMC’s total assets, including financial and non-financial holdings, stood at ₹8,035.7 crore as of December 2024, up from ₹7,557.6 crore at the end of March 2024.

Brokerages Bullish on HDFC AMC Stock Despite Fall

Brokerage firms remain optimistic about the stock’s long-term growth potential. The company’s strong market presence, robust financial performance, and steady SIP inflows position it well for future gains. Investors looking for long-term opportunities may find the stock attractive despite the recent weakness, as regulatory tailwinds and increasing investor participation continue to support the mutual fund industry. Here’s what they said:

Motilal Oswal: The brokerage has maintained a buy rating on HDFC AMC with a target price of ₹4,800, implying a 27 per cent upside from current levels. The brokerage emphasised the company’s strong industry position, experienced management team, and best-in-class cost management.

“HDFC AMC has been one of the top-performing players in the industry, benefiting from an experienced team with a strong track record, cost efficiency, and the strategic advantage of the HDFC Bank distribution channel. Despite the recent market correction, the company’s broad expertise in the sector gives it an edge over newer entrants,” Motilal Oswal stated.

The brokerage has, however, revised its earnings per share (EPS) estimates downward by 6 per cent for FY26 and FY27 to account for the weak market sentiment and slower equity AUM growth. It values the stock at 38x FY27 core EPS and continues to see significant upside.

Prabhudas Lilladher: The brokerage has also retained its buy call but revised its target price downward to ₹4,450 from ₹4,700. The brokerage highlighted the strong brand value of HDFC AMC, backed by solid investment strategies, risk management, and product diversification.

“HDFC AMC’s MD & CEO remains optimistic about the Indian AMC industry’s growth potential, drawing parallels to the U.S. market between the 1980s and 2000s. The industry’s unique investor count, which stood at 52.6 million in December 2024, is expected to grow at a robust pace,” the brokerage noted.

Prabhudas Lilladher pointed out that equity AUM for the mutual fund industry corrected by 9.4 per cent from October 2024 to January 2025, leading to a downward revision of core EPS estimates for FY26 and FY27 by an average of 5 per cent. Despite this, it maintains a valuation multiple of 35x on September 2026 core EPS.

PL added that the recent regulatory changes have been broadly supportive of the AMC industry. Notable developments include the introduction of a new AIF product, the reduction of the minimum SIP amount to ₹250, personal taxation benefits, and GST-led formalization of the economy. Moreover, the industry has witnessed stable SIP flows despite market downturns, indicating increasing investor maturity.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.