Motilal Oswal Recommends Buying HDFC AMC Stock

HDFC Asset Management Company (HDFC AMC) Research Report

Key Highlights

• HDFC AMC is one of the top three mutual fund houses in India, with a QAAUM of INR9.2 trillion and an overall/active equity market share of 11.4%/13% as of December 2025.
• The company's fund performance has consistently been a key differentiator, with >69% of its AUM staying in the top two quartiles on a 1-year basis since April 2025, and >70% on a 3-year basis since January 2023.

Business Performance

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• Retail franchise remains strong, with SIP AUM of INR2.2 trillion (up 25% YoY) and ~15.8% SIP market share.
• HDFC AMC retains clear cost leadership, with a cost-to-income ratio of ~19% (vs. peers at ~25-54%), resulting in best-in-class profitability (PAT-to-AAUM ratio of ~33bp).
• The company has a share of ~28% within HDFC Bank, indicating significant untapped potential for deeper penetration through HDFC Bank's branch network.

Outlook and Valuation

• We expect a CAGR of 17%/14%/15%/15% in AUM/revenue/EBITDA/PAT over FY26-28E.
• HDFC AMC has corrected sharply by ~17% over the past month, bringing valuations to more reasonable levels despite strong systematic inflows and consistent fund performance.
• We maintain a BUY rating with a one-year target price of INR2,700 (36x FY28E core EPS).