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Investing.com - JPMorgan has upgraded HDFC Asset Management Co Ltd (HDFCAMC:IN) from Neutral to Overweight and raised its price target to INR6,500.00 from INR5,000.00 following strong quarterly results.
The asset management company reported first-quarter core EBIT of Rs 7.6 billion, representing a 6% quarter-over-quarter increase and 30% year-over-year growth, which exceeded JPMorgan’s estimates by 2%. The outperformance was primarily driven by lower operating expenses while maintaining a resilient revenue yield of 47 basis points.
HDFC AMC demonstrated solid quarterly average assets under management (QAAUM) growth of 23% year-over-year and 7% quarter-over-quarter, while maintaining its overall market share. The company achieved an EBIT margin of 37 basis points relative to QAAUM, in line with forecasts.
The firm’s other income surged 89% quarter-over-quarter due to mark-to-market gains on investments in debt mutual funds, which benefited from rate cuts. During the quarter, the industry experienced higher debt flows compared to equity flows, with positive overall inflows across asset classes.
Following the results announcement, HDFC Asset Management’s stock rose by 2%, contributing to its 28% year-to-date rally, which significantly outperforms the NIFTY’s 6.6% gain during the same period. JPMorgan expects consensus earnings estimates to increase after these results.
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