HDFCAMC - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.4
| Stock Code | HDFCAMC | Market Cap | 1,05,300 Cr. | Current Price | 2,461 ₹ | High / Low | 2,967 ₹ |
| Stock P/E | 36.6 | Book Value | 181 ₹ | Dividend Yield | 1.83 % | ROCE | 43.3 % |
| ROE | 32.4 % | Face Value | 5.00 ₹ | DMA 50 | 2,594 ₹ | DMA 200 | 2,562 ₹ |
| Chg in FII Hold | -0.70 % | Chg in DII Hold | 0.77 % | PAT Qtr | 770 Cr. | PAT Prev Qtr | 718 Cr. |
| RSI | 40.9 | MACD | -39.6 | Volume | 6,05,900 | Avg Vol 1Wk | 12,07,912 |
| Low price | 1,763 ₹ | High price | 2,967 ₹ | PEG Ratio | 1.75 | Debt to equity | 0.00 |
| 52w Index | 57.9 % | Qtr Profit Var | 20.0 % | EPS | 67.2 ₹ | Industry PE | 25.3 |
💹 Core Financials: HDFCAMC demonstrates strong fundamentals with ROE at 32.4% and ROCE at 43.3%, highlighting efficient capital allocation. Debt-to-equity ratio is 0.00, reflecting a debt-free balance sheet. Quarterly PAT increased from ₹718 Cr. to ₹770 Cr., showing a healthy 20% profit variation. Dividend yield of 1.83% provides moderate income, supported by stable cash flows.
📊 Valuation Indicators: Current P/E of 36.6 is significantly higher than the industry average of 25.3, suggesting overvaluation. Book value of ₹181 against CMP of ₹2,461 implies a high P/B ratio. PEG ratio of 1.75 is relatively reasonable compared to peers, indicating growth potential is somewhat aligned with valuation. Intrinsic value appears lower than CMP, pointing to stretched valuations.
🏢 Business Model & Competitive Advantage: HDFCAMC operates as a leading asset management company, benefiting from strong brand equity, wide distribution network, and trust associated with HDFC Group. Its competitive advantage lies in scale, diversified product offerings, and consistent inflows from retail and institutional investors. Recurring revenues from management fees provide stability.
💰 Entry Zone Recommendation: Considering DMA 50 at ₹2,594 and DMA 200 at ₹2,562, the stock is currently trading below these averages, showing weakness. A favorable entry zone would be ₹2,100–₹2,250 during corrections. Current levels remain slightly overvalued relative to intrinsic metrics.
📈 Long-Term Holding Guidance: Despite valuation concerns, HDFCAMC remains fundamentally strong with high return ratios, debt-free status, and consistent profit growth. Long-term investors can hold, while new investors should wait for dips to improve risk-reward balance.
Positive
- High ROE (32.4%) and ROCE (43.3%) reflect superior efficiency.
- Debt-free balance sheet ensures financial stability.
- Quarterly PAT growth of 20% shows strong earnings momentum.
- Strong brand equity and distribution reach under HDFC Group.
Limitation
- P/E ratio (36.6) is much higher than industry average (25.3).
- Book value of ₹181 vs CMP ₹2,461 implies high P/B ratio.
- Dividend yield of 1.83% is modest compared to peers.
Company Negative News
- Decline in FII holdings (-0.70%) signals reduced foreign investor confidence.
- Stock trading below DMA 50 and DMA 200 indicates technical weakness.
Company Positive News
- Increase in DII holdings (+0.77%) reflects strong domestic institutional support.
- Quarterly profit growth of 20% boosts investor sentiment.
- Strong brand trust and consistent inflows into mutual funds.
Industry
- Asset management industry benefits from rising financialization of savings in India.
- Industry P/E at 25.3 suggests peers trade at more reasonable valuations.
- Competition from SBI AMC, ICICI Prudential AMC, and Nippon AMC keeps pressure on margins.
Conclusion
⚖️ HDFCAMC is a fundamentally strong, debt-free company with excellent return ratios and strong profit growth. However, valuations are stretched compared to industry peers. Long-term investors can hold, while new investors should wait for corrections towards ₹2,100–₹2,250 for better entry opportunities.
Would you like me to also prepare a peer comparison HTML snippet against SBI AMC and ICICI Prudential AMC so you can see relative strengths and weaknesses side by side?