High pass-through of total expense ratio (TER) cut with distributors is unlikely to have a high bearing on asset under management (AUM) growth of asset management companies (AMC), according to analysts at Kotak Institutional Equities. The research firm observed that AUM are likely well-protected from induced churn and incremental flows are much more responsive to performance, even with lower commissions.
Live TV
Kotak Institutional Equities Research also observed that any impact on growth rate due to lower commissions could be compensated through a stronger alignment of interests with the new parent.
HDFC AMC’s flows have meaningfully revived in the last 6-12 months compared to the industry despite lower commissions, the research firm mentioned.
The research firm assigned an 'Add' rating to HDFC Asset Management Company Ltd with a target price of Rs 2,000, which reflects around 5 percent decline from Tuesday’s closing price. Kotak sees up to 15 percent upside on UTI AMC as it has assigned a 'Buy' call to the asset management company with a target price of Rs 800 per share.
The research firm assigned an 'Add rating to Aditya Birla Sun Life AMC with a target price of Rs 390 apiece, implying potential gains of 5 percent from Tuesday’s close.
It assigned an 'Add' rating to Nippon AMC and sees a potential upside of 7 percent with a target price of Rs 270 per share.
ABSL AMC shares were trading 1.86 percent higher at Rs 377.95 apiece and Nippon AMC stock was trading up 1.41 percent at Rs 255.85 apiece on BSE at 11.05 AM.
UTI AMC shares were down 0.33 percent at Rs 688.25 apiece while HDFC AMC is down 1.39 percent at Rs 2075 per share.
