HDFC Asset Management Company Ltd. : Analysis of Intrinsic Value of shares using Free Cashflow to Equity

HDFC Asset Management Company Ltd is https://www.hdfcfund.com/ offering Fund Manager services.

HDFC AMC is powered by purpose of contributing prosperity through their mission to be wealth creator for every Indian.

HDFC Bank (Largest Private sector Bank in India) owns 52.55% of shares in HDFC Asset Management Company LTD.

 

 

FCFE Details of HDFC AMC Ltd. shown below, Indian Rupees in Crores, except per share data

Year	Value	FCFE or Terminal Value	Present Value at 11.85%
0	FCFE0	2475	2475
1	FCFE1	2796	2213
2	FCFE2	3152	2236
3	FCFE3	3543	2253
4	FCFE4	3973	2264
5	FCFE5	4444	2270
5	Terminal Value (TV5)	73745	13710

Intrinsic value of HDFC Asset Management Company Ltd.	Rs.87456 Cr
Market cap of HDFC Asset Management Company Ltd.	Rs.91091 Cr
Intrinsic value of HDFC Asset Management Company Ltd. common stock (per share)	Rs.4096
Current share price on 20/12/2024	Rs.4262

 

Required rate of Return

Assumptions

Rate of return on LT Treasury Composite(Rf)	7.3%
Expected rate of return on market portfolio(E(RM)	14%
Systematic risk of HDFC Asset Management Company Ltd. Common stock (β)	0.68
Required rate of return on HDFC Asset Management Company Ltd.. Common Stock (r) Calculation : Rf + β(E(RM)- (Rf) = 7.3% +0.68[14% - 7.3%]	11.86%

 

FCFE Growth rate Forecast

HDFC Asset Management Company Ltd. H-Model

Year	Value	Growth Rate
1	g1 (PRAT Model)	13%
2	g2 (Linear Interpolation)	12.71%
3	g3 (Linear Interpolation)	12.42%
4	g4 (Linear Interpolation)	12.13%
5	g5 (Single stage model)	11.84%

 

 

 

 

 

Financial year 2023-24 Ratio Calculations

Retention rate	47.27%
Dividend yield	1.24%
Profit margin	61.39%
Asset turnover	0.418
Financial Leverage	1.06
Return on Asset	25.71%
Return on Equity	27.45%
EPS	91
PE Ratio	46.8
Price to Sales ratio	28.76

 

 

 

 

 

 

Sources : HDFC Asset Management Company Ltd. for the fiscal year 2023-24 https://www.hdfcfund.com/about-us/financial-information/annual-reports , https://www.stock-analysis-on.net/ , https://finance.yahoo.com , https://companiesmarketcap.com/

 

 

 

 

 

 

 

 

 

 

 

Disclosures

This report is based on information obtained in good faith from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments.