HDFC AMC - Strong Franchise In A Growth Industry: ICICI Securities Initiates Coverage
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ICICI Securities Report
With 14.2%/13.7% total/equity market share as of nine months FY21, industry-leading profitability at 38 basis points of average assets under management as at nine months FY21, strong brand and well-entrenched distribution, HDFC Asset Management Company Ltd. is among the better plays on Indian AUM growth.
We estimate the company to generate ~10% Ebitda (ex-other income) compound annual growth rate between FY20-FY23E with return on equity of 30% and free cash flow/dividend yield of 3.3/1.2%.
Diversification in investment style and induction of new fund managers as well as Managing Director are near term change agents which can positively impact fund performance/flows.
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