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Investing.com - CLSA downgraded HDFC Asset Management Co Ltd (NS:HDFCAMC) from Outperform to Hold on Friday, while simultaneously raising its price target to INR5,670.00 from INR4,545.00.
The downgrade comes despite HDFC AMC reporting strong first-quarter fiscal year 2026 results, with net profit reaching Rs7.5 billion, exceeding CLSA’s estimate by 15%. The asset manager posted 12% quarter-over-quarter assets under management (AUM) growth, alongside margin expansion and strong investment gains.
CLSA cited valuation concerns as the primary reason for the downgrade, noting that HDFC AMC’s current one-year forward price-to-earnings ratio stands at 41.3x, which is above the +1 standard deviation level. The analyst firm pointed out that the last time the PE ratio exceeded 40x was when the company reported sequential AUM growth for four consecutive quarters.
The research firm raised its AUM growth estimates for HDFC AMC, resulting in 4-7% higher earnings per share forecasts for fiscal years 2026-2028. The new price target of INR5,670 implies a June 2027 PE ratio of 37.4x.
CLSA also highlighted HDFC AMC’s launch of a new employee stock ownership plan (ESOP), which now covers 50% of the company’s workforce, reflecting an increased management focus in this area. This new ESOP plan has prompted CLSA to increase its expense estimates by 6-8% for fiscal years 2026-2028.
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