HDFC AMC shares fall 3% despite 24% YoY rise in Q2 PAT. Should you buy the dip?

Shares of HDFC Asset Management Company (HDFC AMC) tumbled 3.4% to their day’s low of Rs 5,561.70 on the BSE on Thursday, October 16, even as the company reported a 24.5% year-on-year (YoY) growth in profit after tax (PAT), which rose to Rs 718 crore from Rs 576.9 crore in the corresponding quarter of the previous financial year.

Along with the Q2 results, HDFC AMC also announced its first-ever 1:1 bonus issue.

Revenue during the quarter also saw solid growth, increasing by 15.6% YoY to Rs 1,026 crore compared to Rs 887.2 crore in Q2FY25. EBITDA stood at Rs 800 crore, up 13.7% from Rs 704 crore in the same quarter last year. The company’s operating margin came in at 78%, slightly lower by 140 basis points from 79.4% in the year-ago period.


In addition to the earnings report, HDFC AMC on Wednesday announced a 1:1 bonus issue. Shareholders will receive one fully paid-up equity share of Rs 5 each for every existing share held. This marks the first time HDFC AMC has issued bonus shares since its listing in 2018. The proposal is subject to shareholder approval via postal ballot, along with other statutory and regulatory clearances.

The company has set Wednesday, November 26, 2025, as the record date to determine eligible shareholders for the bonus issue. The board of directors approved the bonus issuance on October 15.

Here’s what analysts are saying:

Morgan Stanley: Equalweight| Target price: Rs 5,400

Morgan Stanley has maintained an "Equalweight" rating on HDFC Asset Management Company (HDFC AMC) and raised its target price to Rs 5,400 from Rs 5,280.

The revision comes in the wake of HDFC AMC’s strong Q2FY26 performance, which prompted the brokerage to revise key assumptions and estimates upward.

Following the Q2 beat, Morgan Stanley has raised its assumptions for Systematic Investment Plan (SIP) flows across the forecast period of FY26 to FY28. As a result, revenue forecasts have been increased by 1% for FY26, 2% for FY27, and 3% for FY28.

Additionally, the brokerage has revised the tax rate assumption for FY26, lowering it to reflect the 18% tax rate reported in Q2. This adjustment has contributed to an upward revision in profit after tax (PAT) projections.

Overall, Morgan Stanley now expects PAT to rise by 3% in FY26, 2% in FY27, and 3% in FY28, reflecting the improved revenue outlook and favorable tax adjustments.

Nuvama: Buy| Target price: Rs 7,020

Nuvama has maintained a "Buy" rating on HDFC Asset Management Company (HDFC AMC) and raised its target price to Rs 7,020 from Rs 6,530.

The upward revision is driven by a valuation rollover to September FY27 estimates.

In Q2FY26, HDFC AMC recorded strong Systematic Investment Plan (SIP) inflows of Rs 86,100 crore, marking a 6.8% quarter-on-quarter (QoQ) increase. However, the impact of a weak equity market tempered overall growth, resulting in equity QAAUM (Quarterly Average Assets Under Management) growth of 15.5% year-on-year (YoY) and 7.5% QoQ.

Revenue and earnings before interest and taxes (EBIT) rose 15.8% and 13.5% YoY, respectively. Adjusted profit after tax (APAT), however, showed a modest YoY growth of 3.9% but declined 10.2% on a sequential basis to Rs 670 crore.

Due to ongoing market conditions and margin pressures, Nuvama has slightly lowered its NOPLAT (Net Operating Profit Less Adjusted Taxes) estimates for FY26, FY27, and FY28 by 1.3%, 1.6%, and 0.8%, respectively. Despite these adjustments, the stock continues to be valued attractively, with FY27E and FY28E price-to-earnings (P/E) multiples of 45.6x and 38.8x, respectively.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)