The 50% rally seen in HDFC AMC Ltd shares over the past six months has positioned the stock for some downside, Citi wrote in its note, expressing its cautious stance.
Citi reiterated its ‘sell’ rating on HDFC AMC with a price target of ₹4,775 per share, implying a potential downside of 17% from Monday’s close.
The brokerage recently held a meeting with the company’s senior management in Singapore, where they discussed HDFC AMC’s focus on scaling its non-mutual fund business, control expenses and profitability management.
HDFC AMC management intends to expand its market presence in the alternative space supported by sustained new product launches. However, it intends to grow in a guarded manner while maintaining its investment discipline, the Citi note said.
Management spoke about product innovation, investment discipline and graduated approach as key levers to achieve market leadership in non-mutual fund segments over the next decade, according to the note.
HDFC AMC management also remained constructive on structural growth in equity MF flows aided by stable and sticky recurring SIP flows, although recognizing short-term volatility in flows amid sustained sluggishness in listed stocks, Citi said.
Although execution risks remain, Citi said it is excited about management’s growing focus on non-mutual funds. However, the stock’s current wealth, at 36 times its estimated fiscal 2027 earnings per share (EPS), is boosting the brokerage’s guarded position.
Of the 28 analysts who have coverage on AMC HDFC stock, 19 have a “Buy” rating, eight have a “Hold” rating and one has a “Sell” rating.
HDFC AMC shares fell 0.9 per cent to ₹5,608.5 apiece on Tuesday around 10:40 am. The stock has gained 50.3% over the past six months.
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