Kotak Equities downgrades multibagger HDFC AMC, upgrades Aditya Birla Sun Life to Add

Shares of multibagger HDFC Asset Management Company (AMC) have been downgraded by Kotak Institutional Equities despite growth tailwinds remaining the strongest.

The company’s outperformance over its peers is fully priced in at the current valuations, Kotak said in a note as it slashed the stock’s fair value to Rs 3,750, a 1.5% climbdown from Tuesday’s closing price of Rs 3,811.

Kotak, on the other hand, upgraded Aditya Birla Sun Life AMC to ‘Add’ from an earlier ‘Reduce’ rating while retaining its ‘Add’ stance on Nippon Life India Asset Management and ‘Reduce’ on UTI AMC.

AMC stocks are currently trading at a 55-60% premium to broader markets, this brokerage said.

HDFC AMC: Reduce | Target: Rs 3,750 | Downside: 1.5%

HDFC AMC’s well-balanced fund mix will continue to drive strong flows and market life share gains, Kotak said. HDFC AMC shares have delivered 126% returns over the past 12 months.

Aditya Birla SL AMC: Add | Target: Rs 500 | Upside: 10%

AB AMC trades at attractive valuations but needs some visibility of turnaround in performance and flows in flagship categories, Kotak said. The target has been retained at Rs 500 which is a 10% upside from the recommended level. Its returns over the past 12 months stand at 45%.

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Nippon Life: Add | Target: Rs 510 | Upside: 14%

The target price has been reduced from Rs 550 to Rs 510. The stock has delivered returns of Rs 134% in the past 12 months. Nippon is expected to take some hits due to exposure to small & midcap (SMID) stocks comprising 35% of equity AUM. However, this impact is likely to get offset by other categories seeing stronger flows.

UTI AMC: Reduce | Target: Rs 880 | Target: 5%

The target price has been reduced from Rs 900 to Rs 880 now. This share has returned 27% returns in the past 12 months. UTI AMC has the weakest fund performance across four AMCs, resulting in outflows for the past 4-5 quarters, Kotak noted.

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

Roy Walsh

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