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Although bullish on , PMS fund manager Saurabh Mukherjea has exited stock which is down by 40 per cent in the last one year. In a note to investors, Marcellus Investment Managers said it is exiting from its ‘Kings of Capital’ portfolio.
“Owing to the reduction in our expected long-term earnings growth forecast for HDFC AMC, our position sizing framework has suggested an exit from the stock,” Marcellus said.
HDFC AMC is one of the largest mutual fund houses in India but its stock has been under pressure. Trading at Rs 1785.5 on Monday, the stock is down 47 per cent from its 52-week high of Rs 3,365. The average price target of Rs 2,538, however, signals an upside potential of 42 per cent in the stock, according to Trendlyne data. The average of 21 analysts covering the stock shows a buy recommendation on HDFC AMC.
The PMS firm’s ‘Kings of Capital’ portfolio has a basket of 10 to 14 quality financial companies (banks, NBFCs, life insurers, general insurers, asset managers, brokers) that have good corporate governance, prudent capital allocation skills and high barriers to entry.
HDFC Bank, and are part of the portfolio. Last month, was replaced with Company (HFFC).
Describing it as the true consistent compounder, Marcellus has been bullish on HDFC Bank. “HDFC Bank has consistently paid dividends using ~20 per cent of its profits over the last decade. However, the bank raised capital twice during the last 10 years. Given these large capital issuances at high P/B multiples and stable RoEs (at 18 per cent), the bank was able to post 21 per cent BVPS compounding,” it said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
“Owing to the reduction in our expected long-term earnings growth forecast for HDFC AMC, our position sizing framework has suggested an exit from the stock,” Marcellus said.
HDFC AMC is one of the largest mutual fund houses in India but its stock has been under pressure. Trading at Rs 1785.5 on Monday, the stock is down 47 per cent from its 52-week high of Rs 3,365. The average price target of Rs 2,538, however, signals an upside potential of 42 per cent in the stock, according to Trendlyne data. The average of 21 analysts covering the stock shows a buy recommendation on HDFC AMC.
The PMS firm’s ‘Kings of Capital’ portfolio has a basket of 10 to 14 quality financial companies (banks, NBFCs, life insurers, general insurers, asset managers, brokers) that have good corporate governance, prudent capital allocation skills and high barriers to entry.
HDFC Bank, and are part of the portfolio. Last month, was replaced with Company (HFFC).
Describing it as the true consistent compounder, Marcellus has been bullish on HDFC Bank. “HDFC Bank has consistently paid dividends using ~20 per cent of its profits over the last decade. However, the bank raised capital twice during the last 10 years. Given these large capital issuances at high P/B multiples and stable RoEs (at 18 per cent), the bank was able to post 21 per cent BVPS compounding,” it said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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