JPMorgan lowers HDFC AMC growth view

Mumbai

JPMorgan has downgraded HDFC Asset Management Company (HDFC AMC) from ‘overweight’ to ‘neutral’. The global financial firm believes the company’s growth may slow down in the near future due to weaker equity inflows and steady asset allocation by households.

Despite the downgrade, JPMorgan has kept its target price unchanged at ₹5,000. They say the stock already reflects much of its future potential, as it trades at 37 times FY26 earnings and 33 times FY27 earnings.

The downgrade is based on two main reasons. First, India’s nominal GDP growth is expected to stay around 10-11%. Second, the shift of household savings into equities appears to be pausing for now.

In May, equity inflows into mutual funds dropped to ₹19,000 crore — the lowest in the past year. This was due to profit booking and cautious investor behaviour. However, not all trends are negative.

Systematic Investment Plan (SIP) flows remain strong. In May, ₹26,700 crore came in through SIPs. The number of SIP accounts also rose to 85.6 million, showing long-term confidence among investors.

JPMorgan still expects HDFC AMC to grow its assets under management (AUM) by 16% each year for the next three years. It believes the merger of HDFC with HDFC Bank will help the AMC expand its distribution network, which could lead to better growth than expected.

The firm forecasts HDFC AMC’s earnings before interest and taxes (EBIT) will remain steady at 37 basis points of AUM. Currently, 64% of its AUM is in equities, which continues to perform strongly.