Here is the Stock Review of HDFC Asset Management Company (AMC) and Target Price as set by Morgan Stanley
HDFC's mutual fund is the second-largest in India based on total assets under management and the largest mutual fund based on equity AUM, both including and excluding ETFs. We forecast a 19% total AAAUM CAGR and a 26% equity AAAUM CAGR over F18-21. We
forecast an 18% EPS CAGR over F18-21 and expect ROAUM/ROE of 0.26%/35% by F21.
HDFC AMC trades at 35x our one-year forward EPS estimate, which looks lofty, but the strong structural growth story along with
our expectation of healthy EPS growth given improving macro conditions in the next three years drives our expectation of further stock
returns over the next 12 months.
The Base Case target Price of Rs 1765 is based on the basis of 35x earnings for Sep-20e EPS. FY 2019 e EPS 41.9 and FY 2020 e EPS RS 44.19.
