HDFC Asset Management Company was trading in green up over 2%. The share price has been trending higher, and Motilal Oswal sees room for significant upside. The brokerage has put out a ‘Buy’ rating on the stock with a target price of Rs 2,700, implying an upside of roughly 20%.
Motilal Oswal describes HDFC AMC as one of the top three mutual fund houses in India, with quarterly average assets under management of Rs 9.2 lakh crore and an overall and active equity market share of 11.4% and 13% respectively as of December 2025.
“The company remains among the top three asset management companies in India, supported by strong brand equity, a wide distribution network, and consistent fund performance across market cycles,” notes Motilal Oswal.
The brokerage expects the company to clock a compound annual growth rate of 17%, 14%, 15% and 15% in assets under management, revenue, earnings before interest, tax, depreciation and amortisation, and profit after tax respectively over FY26 to FY28, and has set its one-year target at Rs 2,700, pegged at 36 times FY28 estimated core earnings per share.
Motilal Oswal on HDFC AMC: A cost machine that peers cannot match
When it comes to profitability, very few asset management companies in India come close to what HDFC AMC consistently delivers, and Motilal Oswal makes that case with numbers. The brokerage points out that HDFC AMC runs a cost-to-income ratio of around 19%, compared to peers operating anywhere between 25% to 54%. That gap translates directly into best-in-class profitability, with profit after tax to quarterly average assets under management of around 33 basis points and a return on equity that stays above 30%.
“The company retains clear cost leadership, with a cost-to-income ratio of approximately 19% versus peers at approximately 25-54%, translating into the best-in-class profitability and supporting strong cash generation and return on equity of more than 30%,” Motilal Oswal wrote.
Operating margins sit in the range of 33% to 36%, among the highest in the Indian asset management company industry, supported by a product mix that leans heavily towards equity. Equity-oriented assets made up around 65.5% of quarterly average assets under management in the third quarter of FY26, against an industry average of 56.5%, the firm added.
Motilal Oswal on HDFC AMC: The systematic investment plan book is a steady compounding engine
Motilal Oswal draws attention to the more durable part of the HDFC AMC story, which is its systematic investment plan franchise. Systematic investment plan assets under management have grown 24% year-on-year to Rs 2.2 lakh crore, while quarterly systematic transactions including systematic investment plans and systematic transfer plans rose 24% year-on-year to Rs 47.3 billion.
“The combination of a strong equity franchise, resilient systematic investment plan book and expanding retail investor base provides high visibility on incremental flows and assets under management compounding,” Motilal Oswal said.
The company has roughly 1.54 crore unique investors, accounting for about 26% industry penetration. Individual investors contribute approximately 69% of total monthly average assets under management, against an industry average of 60.1%.
Motilal Oswal on HDFC AMC: Fund performance is getting stronger across the board
Consistent fund performance remains central to the business, and HDFC AMC has strengthened this over the past two years. According to Motilal Oswal, more than 69% of the company’s assets under management has consistently stayed in the top two quartiles on a one-year basis since April 2025, rising to approximately 79% as of February 2026. On a three-year basis, the number stands at approximately 82% as of February 2026.
“Fund performance remains a key differentiator, with more than 69% of its assets under management consistently staying in the top two quartiles on a one-year basis since April 2025, approximately 79% in February 2026, and more than 70% on a three-year basis since January 2023, approximately 82% in February 2026, reinforcing performance credibility and market share gains despite market volatility.” — Motilal Oswal
Motilal Oswal on HDFC AMC: The HDFC Bank opportunity is largely untapped
One of the more important levers, according to Motilal Oswal, is the distribution opportunity within HDFC Bank. As of FY25, HDFC AMC commands around 28% share within HDFC Bank, compared to 98% for SBI Mutual Fund, 69% for ICICI Prudential Mutual Fund and 35% for Axis Mutual Fund within their respective banking channels.
“This indicates significant untapped potential for deeper penetration through HDFC Bank’s branch network,” Motilal Oswal said.
The brokerage notes that the share of systematic investment plan flows through the HDFC Bank channel is already meaningfully higher than the overall book share, suggesting improving traction.
Motilal Oswal on HDFC AMC: Alternatives and portfolio management services add a new growth layer
Beyond the mutual fund business, HDFC AMC has been building its portfolio management services and alternatives platform. Portfolio management services assets under management stood at Rs 5,800 crore, comprising Rs 800 crore in discretionary mandates and Rs 5,000 crore in non-discretionary mandates as of December 2025.
Total alternative investment fund commitments stood at Rs 2,500 crore, including Rs 1,200 crore in HDFC AMC Select Alternative Investment Fund Fund of Funds and Rs 1,300 crore in HDFC AMC Structured Credit Fund.
The credit fund was launched in partnership with the International Finance Corporation, which may invest up to Rs 220 crore, and the fund has raised commitments of approximately Rs 1,290 crore at its first close.
“While alternatives and portfolio management services currently represent a relatively smaller share of overall assets at Rs 8,400 crore compared to the mutual fund franchise, these segments typically operate at higher fee structures, providing scope for incremental revenue diversification,” Motilal Oswal said.
Conclusion
Motilal Oswal’s bull case on HDFC AMC rests on a combination of cost efficiency, steady systematic flows, improving fund performance, distribution potential within HDFC Bank and a growing alternatives business. The stock has corrected around 17% over the past month, compared to a 12% to 15% decline in listed peers, which the brokerage says has brought valuations to more reasonable levels.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.
