Tag: Morgan Stanley

Layoff wave hits Asian investment banking divisions of JPMorgan, Morgan Stanley, HSBC

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Between April and May of this year, major players in the global financial arena — JPMorgan Chase & Co, Morgan Stanley, and HSBC Holdings Plc — have initiated significant layoffs in their Asian investment banking divisions. These actions are in response to dwindling deal volumes and economic uncertainties, prompting a need for strategic restructuring.

JPMorgan Chase & Co recently launched another round of cutbacks, eliminating a minimum of seven positions across sectors like consumer, energy, and healthcare, according to Bloomberg reports on Tuesday, May 7. This move follows two previous rounds of layoffs in Asia last year, totalling approximately 50 positions.

Despite these challenges, the Wall Street giant recently promoted 48 employees to executive positions in Asia, alongside over 100 promotions across Europe, the Middle East, and Africa.

Meanwhile, Morgan Stanley has been reported to embark on its most significant downsizing effort in the Asia-Pacific region in years, according to Bloomberg. It intends to eliminate around 50 roles, with at least 80% of the reductions expected in Hong Kong and China. This decision, announced in mid-April, highlights the economic headwinds gripping China, exacerbated by an enduring real estate crisis.

Despite attempts to delay layoffs in hopes of voluntary exits, the firm finds itself compelled to implement deeper cuts as revenue from China continues to shrink. These impending job cuts mark the most substantial downsizing effort by Morgan Stanley in China in recent memory, particularly significant given China’s status as its largest market in the region.

HSBC Holdings Plc has also entered the fray, trimming approximately a dozen positions within its Asian investment banking division, according to Bloomberg. This move is in response to the pronounced downturn in deal-making activity across the region, particularly evident in the Hong Kong and China markets.

HSBC joins the ranks of global competitors like UBS Group AG, Goldman Sachs Group Inc, and Citigroup Inc, all of whom have undergone multiple rounds of job reductions in Asia over the last 18 months amidst a downturn in stock sales and merger activity.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

This cement stock has gained more than ₹200 per share in trade today

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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UltraTech Cement shares jumped more than ₹200 apiece, surging over 2% on Monday as the Street turned bullish on its plans to buy a 1.1-mtpa grinding unit in Maharashtra for ₹315 crore will expand capacity and presence in the fast-growing region. UltraTech Cement hit the day’s high price of ₹9,590. At 2.17 pm, the stock was quoted at ₹9,585.

Global brokerage Morgan Stanley has maintained its “overweight” stance on the stock and target price at ₹11,600, as the Maharashtra unit will boost the cement major’s presence in the state.

The acquisition, valued at ₹315 crore, was formalised through an Asset Purchase Agreement between UltraTech Cement and India Cements Ltd.

The unit located in Maharashtra’s Parli also includes a captive railway siding, it said, while adding that the company plans to expand the brownfield development of 1.8 mtpa at Dhule in the state.

#CNBCTV18Market | Morgan Stanley maintains an overweight call on UltraTech Cement. Says company’s expansion will further strengthen its presence in Maharashtra pic.twitter.com/MOhfdQmEaU

— CNBC-TV18 (@CNBCTV18Live) April 22, 2024

The expansion will cumulatively cost around ₹500 crore and will be funded by internal accruals, the brokerage firm said. Earlier this month, the company completed a 100-megawatt (MW) solar energy project under the Group Captive Scheme in Rajasthan.

This was the company’s first project to source power for its captive consumption from the inter-state transmission network.

ALSO READ | UltraTech best positioned in cement demand upcycle, says this analyst post ₹32,400 cr capex plan

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

These two brokerages raise target price on HDFC Bank: Should you buy now?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Brokerage firms Jefferies and Nomura have raised their target price on HDFC Bank after the lender reported results for the fourth quarter of FY24 on Saturday (April 20). Despite the bank’s numbers falling below estimates, the brokerage houses are optimistic about its prospects.

HDFC Bank reported a 0.9% sequential increase in net profit, totalling ₹16,511.9 crore for the fourth quarter of FY24.

Year-on-year numbers were not comparable due to the bank’s merger with Housing Development Finance Corporation (HDFC) on July 1, 2023.

Here’s a table summarising the target prices and recommendations of all brokerage firms regarding HDFC Bank:

Jefferies has issued a recommendation to ‘buy’ HDFC Bank shares, with an increased target price of ₹1,880 per share.

The firm believes that the bank’s pre-provision operating profit (PPOP) was in line with estimates.

Jefferies also noted a slight increase in net interest margins (NIMs), despite a rise in the liquidity coverage ratio. Additionally, it highlighted strong deposit growth of 17%.

Nomura, on the other hand, adjusted its stance on HDFC Bank to ‘neutral’ and raised the target price to ₹1,660 per share from the previous ₹1,625 per share.

Nomura noted a gradual adjustment phase currently underway.

The firm now anticipates a loan growth of 12-13%, down from the earlier projection of 15%, with deposits expected to grow at a 17% compound annual growth rate (CAGR) over the fiscal years 2024 to 2026.

Nomura estimates a return on equity (RoE) of approximately 14-15% for the financial years 2025 to 2026.

Notably, the bank’s loan-to-deposit ratio saw a decrease to 104% from 110% in Q3FY24, with deposits outpacing loans significantly in a seasonally strong Q4.

Management has stated its intention to prioritise profitability over growth.

Nomura anticipates a gradual improvement in the trajectory of net interest margins (NIMs) and has adjusted the estimates downward for the financial years 2025 to 2026 earnings per share (EPS) by nearly 3% due to softer loan growth.

Meanwhile, brokerages such as ICICI Securities and Motilal Oswal are also bullish on HDFC Bank.

ICICI Securities has upgraded HDFC Bank to ‘buy’ from ‘add’, setting a target of ₹1,850 per share.

The firm highlighted the bank’s strong reported and adjusted Return on Assets (ROA) for Q4.

Additionally, it anticipates a gradual re-rating of the bank’s stock based on sustained deposit growth, supported by a significant reduction in borrowings, down 10% QoQ.

Moreover, the quarter-on-quarter rise in Net Interest Margin (NIM) and Liquidity Coverage Ratio (LCR) further strengthened the positive outlook.

Despite these optimistic indicators, ICICI Securities has revised downward their estimate for loan growth to 13%, citing potential challenges in this area.

This adjustment is mirrored in the lowered earnings per share (EPS) estimates for the financial years 2025 and 2026.

However, the firm still expects HDFC Bank to maintain a healthy RoA of nearly 1.7% for FY25/26, with a respectable Return on Equity (RoE) of 14%-15%.

Motilal Oswal also shares a bullish perspective on HDFC Bank, issuing a ‘buy’ call with a target price of ₹1,950 per share.

The firm found the bank’s Q4 core performance to be in line with expectations, with an improvement in margins compared to the previous quarter.

The prudent deployment of one-off gains to boost floating provisions has contributed positively to the bank’s financial health, it said.

Additionally, Motilal Oswal anticipates growth rates for HDFC Bank over the financial years 2024 to 2026, estimating a Compound Annual Growth Rate (CAGR) of 13.5% to 18% in loans and deposits.

This growth trajectory is expected to translate into a 16% CAGR in earnings, resulting in a RoA/RoE of 1.9%/15.5% by FY26.

On the other hand, Morgan Stanley echoed this sentiment, maintaining an ‘overweight’ call with a target of ₹1,900 per share. The firm emphasised strong bounce-backs in the liquidity coverage ratio and improved margins.

Despite these calls, the share of HDFC Bank opened higher on Monday (April 22) but turned red soon. It fell nearly 1% on BSE to ₹1516.05 apiece.

Meanwhile, the shares of HDFC Bank opened higher on Monday (April 22) but soon turned red, falling nearly 1% on BSE to ₹1516.05 apiece.

At the time of writing this report, the stock was down 0.97% at ₹1516.40 on the BSE.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

ICICI Lombard shares rally may not continue for long: Here’s why

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of ICICI Lombard rose over 3% on Thursday (April 18) after the company reported a 19% year-on-year (YoY) increase in net profit for the fourth quarter of FY24. Despite this bullish sentiment, some brokerages expressed reservations regarding the stock’s potential for continued growth.

They have maintained target prices in the range of ₹1,760 to ₹1,990 per share.

Brokerage firm CLSA’s downgrade to ‘Underperform’ echoes a note of caution.

The brokerage suggests that a strong rally in Q4 may limit future upside potential.

So far this year, ICICI Lombard shares have rallied over 16%, outperforming the 2% gain in the benchmark Nifty 50 index.

CLSA now anticipates a 15% slowdown in premium growth for FY25 and points out management’s tepid guidance on the motor segment as an area of concern.

Brokerage firm Morgan Stanley (MS) acknowledges that Q4 profits are slightly below estimates but remains cautious about the stock’s future trajectory.

While maintaining an ‘Overweight’ stance, MS trimmed its forecasts and anticipates the stock to remain rangebound with a positive bias in the near term.

On the other hand, brokerage firm Jefferies maintains a ‘Buy’ recommendation on the stock. However, it highlights potential risks that could impede ICICI Lombard’s continued growth.

While Q4 performance met expectations, Jefferies identifies catastrophe claims as a key risk factor.

Despite foreseeing health and commercial lines driving growth, Jefferies emphasises the importance of monitoring these risks closely to mitigate potential downsides.

In contrast, HSBC maintains a ‘Buy’ call, buoyed by Q4’s robust premium growth and gains in market share.

It highlights a significant improvement in the combined ratio as a key positive from the Q4 results.

Notably, the combined ratio for ICICI Lombard stood at 103.3% for FY24 compared to 104.5% for FY23.

Meanwhile, the company’s board of directors has proposed a final dividend of ₹6 per share for FY24, subject to shareholder approval.

This final dividend, combined with previous dividends, totals ₹11 per share for FY24.

At the time of writing this report, the shares of the insurer were trading 2.02% higher at ₹1,724.70 apiece on the BSE.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Here’s what makes Aditya Birla Capital merger with financial unit so significant

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Aditya Birla Capital’s recent announcement of a merger with its non-banking finance company (NBFC) subsidiary, Aditya Birla Finance Limited (ABFL), has sparked optimism among financial analysts. Brokerage firms Morgan Stanley and Jefferies have weighed in on the potential implications of this move.

While Morgan Stanley has maintained an ‘Equal-Weight’ call with a target price of ₹196 per share, Jefferies is notably bullish, upgrading its call to ‘Buy’ and raising the target price to ₹225 per share.

Morgan Stanley perceives this merger as having a limited tangible economic benefit.

However, the brokerage acknowledges the potential impact on the Holdco discount, which could be alleviated if ABFL were to list independently before the September 25 deadline.

Holdco discount refers to a reduction in the valuation or market price of Aditya Birla Capital’s shares due to its status as a holding company (Holdco) with diverse subsidiaries, including the non-banking financial company (NBFC) subsidiary, Aditya Birla Finance Limited (ABFL).

Holdco discounts often arise because investors may perceive holding companies as less valuable than individual business units or subsidiaries.

The crucial factor for this strategic manoeuvre lies in securing approval from the Reserve Bank of India (RBI).

Jefferies, on the other hand, stresses the significance of the proposed merger, emphasising its potential to simplify the corporate structure and resolve the impending mandatory listing of ABFL by September 2025.

The merger is projected to lift the Capital Adequacy Ratio (CRAR) by 150 basis points, signalling enhanced financial stability.

However, Jefferies also notes the possibility of Aditya Birla Capital trimming its stake in Aditya Birla Sun Life Insurance (ABSLI) from the current 51% to comply with the 50% cap on holding.

The removal of the Holdco discount on ABFL is expected to boost the Sum of the Parts (SOTP) valuation by 12%.

At the time of writing this report, shares of Aditya Birla Capital were trading 3.28% higher at ₹185.55 apiece.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Jonathan Garner explains why Morgan Stanley prefers India despite the steep valuations

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India is in a virtuous cycle of strong nominal GDP growth, strong capital inflows, healthy corporate profits, and a more stable environment for investors than ever seen historically, says Jonathan Garner, Chief Asia and Emerging Market Equity Strategist at Morgan Stanley. “So it is no surprise to us that India is in a persistent secular bull market.”

Comparing India with Japan, which is also among Morgan Stanley’s top picks, Garner said, India is clearly a costlier market with a return on equity (ROE) of about 16% and a price-to-book ratio (P/B) of four times, against Japan’s 10% ROE and a P/B of 1.5.

But despite its high valuations, second only to the United States globally, Garner sees India’s market growth more evenly spread across different company sizes, unlike the concentrated profitability in the US. He believes this broad-based growth underpins the confidence in India’s ability to sustain significant earnings growth, even at a premium valuation.

“The question for India is how much compounding have we got to go because it is worth paying a growth multiple for a growth stock or a growth market if they’re capable of sustaining earnings growth. And at the moment, we have confidence that 20% compounded EPS (earning per share) growth is going to be sustainable for India over a three to five year horizon. So it’s a very interesting story,” he said.

While India has not yet seen ‘true global appeal’, Garner pointed out that India’s share in the emerging market (EM) index or the Asia ex-Japan index is rising steadily.

Explaining why India has so far not seen inflows similar to those seen in Japan, he said, Japan includes globally recognised stocks that have been familiar to investors for years. Also, the Japanese market in index terms is roughly 3.5-4 times the size of India in free float market cap and it’s a developed market (DM). So, it can attract a much broader range of interest. “It’s (India is) still an EM specialist or Asia ex-Japan specialist market from a foreigner perspective,” said Garner.

Also Read | Japan loses its spot as world’s third-largest economy as it slips into recession

Garner also shared his view on India’s financial sector. “The key point is that the financial sector in India is going to benefit from rising economic activity, rising demand for financial products of all forms and growth in household and corporate leverage over time.”

For the entire interview, watch the accompanying video

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Paytm Block Deal | Morgan Stanley Pte buys 50 lakh shares at ₹487.20 apiece

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Morgan Stanley on Friday (February 2) bought 50 lakh shares of One 97 Communications Ltd, which owns the Paytm brand, for nearly ₹244 crore
through an open market transaction.

According to the bulk deal data on the NSE, Morgan Stanley Asia (Singapore) Pte purchased 50 lakh shares, amounting to a 0.8% stake in Paytm. The shares were acquired at an average price of ₹487.20 apiece, taking the deal size to ₹243.60 crore.

One 97 Communications Ltd slumped another 20% on Friday after the RBI directed Paytm Payments Bank Ltd (PPBL) to stop accepting deposits or top-ups in any customer accounts, wallets, FASTags, and other instruments after February 29.

The stock tanked 20% to ₹487.05 — its lowest trading permissible limit for the day — on the BSE. On the NSE, it tumbled 20% to hit the lower circuit limit of ₹487.20. Shares of One 97 Communications plummeted 20% on Thursday as well. In two days, the company’s market capitalisation (mcap) eroded by ₹17,378.41 crore to ₹30,931.59 crore.

Fintech firm Paytm sees an impact of ₹300-500 crore on its annual operational profit as its customers will not be able to add money to their wallets, FASTags, etc, as RBI barred Paytm Payments Bank Ltd from accepting deposits or top-ups in any customer account.

The central bank on Wednesday barred PPBL from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, and FASTags, among others after February 29, 2024. Till then, customers can add money as well as withdraw money from the Paytm wallet and PPBL account.

RBI said the action against PPBL followed a comprehensive system audit report and subsequent compliance validation report from external auditors. One97 Communications Ltd (OCL) holds a 49% stake in PPBL but classifies it as an associate of the company and not as a subsidiary.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

ICICI Bank jumps 6% after Q3 results, brokerages set target prices in range of ₹1,190 to ₹1,350

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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ICICI Bank shares rose nearly 6% on Tuesday, January 23, after the lender reported a 23.5% increase in standalone profit and a 13% rise in net interest income (NII) on Saturday, January 20. At 9:38 am, the shares were 3.58% up at ₹1,044.35 apiece on BSE.

Key brokerages expressed bullish sentiments on the bank, pegging target prices between ₹1,190 and ₹1,350 per share.

Here’s a look at the target prices given by brokerages on ICICI Bank:

Morgan Stanley has assigned an overweight call to ICICI Bank. It highlighted the bank’s third-quarter Profit After Tax (PAT) growth of 24%, accompanied by a Return on Assets (RoA) of 2.3% and a Return on Equity (RoE) of 18.5%.

The firm remained optimistic about the bank’s strong balance sheet growth, expecting it to stay well above pre-COVID levels.

Despite projecting a potential moderation in RoA as margins adjust, Morgan Stanley foresees profitability remaining robust, making ICICI Bank an attractive investment prospect.

Macquarie, while maintaining an outperform call, acknowledged that the third-quarter PAT was in line with expectations.

Despite facing challenges such as high provisions and operating expenses, Macquarie noted that the bank’s performance was offset by fee income.

The Net Interest Margins (NIMs) decline, as anticipated, has not deterred Macquarie’s positive outlook, with the bank’s FY24 guidance being upheld.

CLSA, with a buy call on ICICI Bank, emphasised that the bank’s business performance is in line across all parameters, making it poised for rerating.

While acknowledging the ongoing moderation in Net Interest Margin, CLSA pointed out that the levels are still 40 basis points above those recorded in Q4FY22.

The bank’s loan growth, coupled with robust asset quality and an average Return on Equity of 17% over the medium term, contributes to CLSA’s positive stance.

CITI maintained a buy call for ICICI Bank, asserting that the bank’s third-quarter performance exceeded expectations. Notably, Net Interest Margin (NIM) experienced a modest decline of only 10 basis points, compared to the estimated 16 basis points decline.

Operating expense (opex) growth was contained at 2%, contributing to the bank’s overall positive financial outlook.

The loan growth, aligning with expectations, recorded 19% year-on-year and 4% quarter-on-quarter, while deposit growth slightly fell below expectations at 3% quarter-on-quarter, CITI said.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

HDFC Bank sheds ₹1.1 lakh crore in m-cap after dropping most in three years: Should you buy?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of HDFC Bank on Wednesday, January 17, erased ₹1.1 lakh crore in market capitalisation after posting biggest single-day fall in three years. The shares of the lender declined following the release of the company’s third quarter results.

Brokerages offered varied perspectives on the HDFC Bank’s performance.

The bank reported a net profit of ₹16,372 crore, marking a sequential increase of 2.5% and a yearly rise of 33.5%.

It is important to note that HDFC Bank merged with Housing Development Finance Corp (HDFC) in June 2023.

Here’s a table summarising the target prices provided by various brokerages after HDFC Bank’s Q3 results:

What do brokerages say?

Brokerage firm Bernstein has an ‘Outperform’ recommendation on the lender, setting a target of ₹2,200 per share. It acknowledged the bank’s weak set of numbers, noting the first year-on-year earnings per share (EPS) decline in a decade.

Flat Net Interest Margins (NIMs) quarter-on-quarter (QoQ) and a 2% year-on-year decline in EPS were highlighted by the firm. The use of lower tax expenses to maintain a 2% Return on Assets (RoA) was mentioned.

Morgan Stanley (MS), with an ‘Overweight’ recommendation and a target of ₹2,110 per share, positively noted a 2% QoQ growth in Profit After Tax (PAT), beating estimates by approximately 4%.

It described the Net Interest Income (NII) as in line with estimates and stable margins QoQ. A stable core Pre-Provision Operating Profit (PPoP) and higher credit costs due to one-time contingency provisions were observed by the brokerage.

Jefferies recommended ‘Buy’, setting a target of ₹2,000 per share.

It commended the bank’s core Profit Before Tax (PBT) growth and net profit exceeding estimates with a lower tax rate. An uptick in retail deposit mobilisation and lending was emphasised as crucial to lifting Net Interest Margins (NIMs).

Stable asset quality and the importance of retail growth were acknowledged by the brokerage.

HSBC, maintaining a ‘Buy’ recommendation but reducing the target to ₹1,950 from ₹2,080 per share, moderated the Net Interest Margin (NIM) expansion estimate from 30 bps to 15 bps over FY24-26.

It reduced near-term earnings estimates, citing pressure.

Despite lowering the target, HSBC maintained a positive stance on HDFC Bank.

InCred recommended an ‘Add,’ with a target of ₹2,000 per share.

It praised the bank’s healthy Profit After Tax (PAT) in Q3 amid a steady quarter-on-quarter (QoQ) margin. The brokerage further highlighted the utilisation of treasury gains for a contingent provision and cautious management of deposit growth.

InCred expressed confidence in credit growth and manageable deposits.

DAM Capital, with a ‘Buy’ recommendation and a target of ₹2,000 per share, noted a 10% beat in Q3 earnings due to a lower tax rate and mark-to-market (MTM)/trading gains.

It emphasised steady core profitability and the creation of a contingency buffer using better treasury gains. The increase in provisions was acknowledged, but DAM Capital maintained a favourable view on valuations.

Motilal Oswal has reiterated its buy rating on HDFC Bank stock with a target price of ₹1,950.

The brokerage firm underscored that HDFC Bank reported in-line earnings led by healthy other income and steady loan growth.

What should investors do?

The brokerages present a diverse range of perspectives on HDFC Bank’s Q3 results, reflecting both positive and cautious sentiments.

However, speaking of market experts, Ashutosh Mishra, Head-Research, Instl Equitiesm, Ashika Stock Broking, said that the current valuation is ‘quite compelling’ particularly when considering not only HDFC’s standalone performance but also the collective performance of its subsidiaries post-merger.

Mishra emphasised the successful execution of the substantial merger, noting the absence of significant negative impacts.

According to him, this positions HDFC Bank as a “screaming buy” at its current level, offering substantial potential gains over the next two to three years.

Deven Choksey, MD, DR Choksey Finserv, highlighted the role of growth in influencing stock prices.

For Choksey, the current results present an opportunity to invest in HDFC Bank at corrected and lower levels.

He views this as a meaningful buying opportunity, foreseeing potential gains ranging from 25-30% going forward

Stock performance

The US-listed shares of HDFC Bank fell 6.7% overnight.

This is the biggest single-day drop seen by the shares listed on the New York Stock Exchange (NYSE) since April 2022, when they had declined 7.5%. It must be noted that HDFC Bank commands over 14% weightage on the Nifty 50 index, which is the highest among the constituents.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Brokerages express optimism with revised targets on HDFC AMC

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Brokerage houses were mostly optimistic about HDFC Asset Management Company (AMC) a day after the firm announced financial results for the quarter that ended December 31, 2023. The firm reported a consolidated net profit of ₹488 crore, marking a 32.2% year-on-year (YoY) increase from ₹369.2 crore in the corresponding quarter last financial year.

While Morgan Stanley (MS) kept the target price at ₹3,000 per share with an equal-weight call, HSBC kept it at ₹3,410 per share with a ‘hold call’.

MS emphasised sustained growth in Systematic Investment Plan (SIP) flows and resilient markets, contributing to higher Assets Under Management (AUM) forecasts.

While acknowledging a higher tax rate impacting earnings, MS remained optimistic about near-term momentum and sentiment.

The brokerage trimmed earnings per share (EPS) projections for FY24 and FY25.

HSBC, on the other hand, highlighted the company’s healthy operating performance in Q3FY24, attributing it to market share gains and strong industry tailwinds.

Despite acknowledging potential challenges with income yields in FY25-26, HSBC anticipates slower earnings per share (EPS) growth compared to Assets Under Management (AUM) growth, forecasting an EPS compound annual growth rate (CAGR) of 9% and an average Return on Equity (RoE) of 28% over FY25/26.

Meanwhile, the AMC closed the quarter with ₹5.75 lakh crore in Assets Under Management (AUM). The Quarterly Average Assets Under Management (QAAUM) reached ₹5.51 lakh crore, reflecting an 11.2% market share in the mutual fund industry.

Operating profit from the core asset management business surged by 25% to ₹496.1 crore.

Total investments amounted to ₹6,469.5 crore as of December 31, 2023, with 90% allocated to mutual funds, 6.1% in debentures and tax-free bonds, and 3% in Alternative Investment Funds (AIFs) and other equities.

HDFC AMC showcased a diversified investment portfolio, with 90% in liquid and debt funds, 7.7% in equity-oriented funds, and the remaining in arbitrage funds.

Total live accounts stood at 149 lakh as of December 31, 2023.

Unique customers as identified by Permanent Account Number (PAN) or PAN-exempt KYC Reference Number (PEKRN) now stand at 87 lakh as of December 31, 2023.

At the time of writing this report, the shares of HDFC AMC were trading 1.55% lower at ₹3447.80 apiece on BSE.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow