ICICI Securities has upgraded HDFC Asset Management Company from 'Add' to 'Buy' rating while maintaining its target price of ₹3,060. The upgrade follows the company's strong 9MFY26 performance and positive outlook for the asset management sector.

Strong Financial Performance Drives Upgrade

HDFC AMC's 9MFY26 results demonstrated robust growth across key metrics:

The brokerage highlighted that these results align with their positive thesis on the asset management space, supported by stable systematic investments and improved yield outlook following recent Total Expense Ratio (TER) regulations.

Superior Business Metrics and Market Position

HDFC AMC's consistent fund performance has translated into strong business fundamentals. The company has maintained stable equity market share while increasing its unique investor share and SIP flow market share across various distribution channels. These metrics reflect the company's competitive positioning in the asset management industry.

Growth Projections and Yield Outlook

ICICI Securities projects measured AUM growth with expectations of approximately 3% growth in Q4FY26, followed by 15% in FY27 and 16% in FY28. The brokerage anticipates a cumulative decline of around 1.1 basis points in yields between Q3FY26 and FY28E.

Valuation Framework and Target Price

The unchanged target price of ₹3,060 is based on 40x FY28E core earnings per share of ₹70.70 plus cash of ₹239 per share. This represents a change in valuation methodology from the previous 45x FY27E core EPS of ₹63.

Risk Assessment and Investment Rationale

While ICICI Securities acknowledges risks from declining yields due to telescopic pricing, fresh flows, regulation, and competition, they believe these risks have diminished. The brokerage justifies HDFC AMC's premium valuation multiples based on its high equity mix, low cost-to-AUM ratio, and proven track record of cost management.

The upgrade reflects confidence in HDFC AMC's ability to navigate industry challenges while maintaining its competitive advantages in fund performance and market positioning.

Market crises have become more frequent due to global interconnectedness, but this trend should be viewed as creating investment opportunities rather than posing threats, according to Chirag Setalvad, Head of Equities at HDFC Asset Management Company. The fund house manages assets worth nearly ₹5,900.00 crore.

Speaking at the 16th India Investment Conference organised by CFA Society India, Setalvad shared insights from his 25-year career in the financial markets. He observed a notable shift in crisis frequency compared to previous generations.

Crisis Frequency and Investment Perspective

"I think that is really unusual, and that will persist going forward," Setalvad explained. "But is that bad news? No, that's fantastic news. You want crisis events to take place so that we can hopefully take advantage of it." He emphasized that investors should maintain focus on long-term goals and avoid reacting to short-term market fluctuations.

Market Valuations and IPO Trends

Setalvad noted that valuations in initial public offerings are becoming more reasonable, though stock markets may continue in a consolidation phase. He pointed out that investors tend to focus excessively on recent weak performance while overlooking strong long-term returns. "Last five-year returns are still in their 20s," he stated, highlighting that markets have delivered solid gains over extended periods despite recent slowdowns.

Indian equities currently trade above historical averages, with the Nifty, mid-cap, and small-cap indices at premiums to long-term valuations. Setalvad suggested that corrections of 15-20% would be necessary to bring valuations closer to average levels. "Consolidation will continue for some time, until valuations normalise," he added.

Global Factors and Trade Outlook

Setalvad emphasized the significant impact of global developments on Indian markets, noting that capital flows and risk appetite are heavily influenced by developments in the US and other major economies. "What happens outside of India is incredibly important," he observed.

Prashant Khemka, Founder of WhiteOak Capital, addressed expectations regarding India-US trade relations. He indicated that prospects for a near-term India-US trade deal have weakened, stating, "I'd be happy if it is in this calendar year," while acknowledging that recent signals suggest possible delays.

Sector-Specific Investment Opportunities

Vikas Khemani, Founder of Carnelian Asset Management, which manages funds worth ₹9,578.58 crore as of December 31, 2025, recommended focusing on areas with visible earnings growth. He identified several key sectors for investor attention:

Khemani specifically highlighted that consumer discretionary stocks and information technology services could benefit if order execution improves and currency trends remain supportive. The emphasis on sectors with visible earnings growth reflects a fundamental approach to navigating current market conditions while positioning for future opportunities.