InCred predicts AMC stock rebound amid market volatility

InCred Equities believes that stocks of asset management companies (AMCs) in India are likely to recover after recent declines. The firm expects mutual fund inflows to remain unpredictable, but also sees opportunities for established AMCs to gain market share. The Indian stock market has faced challenges, which has hurt the value of AMC stocks. In February, inflows into equity mutual funds dropped significantly. This decline was influenced by stock market volatility and weaker economic conditions. Shares of major AMCs, like Nippon Life India Asset Management and HDFC AMC, have decreased by up to 25% over the past three months. Despite these challenges, InCred Equities is optimistic. They think the current stock valuations are attractive. The company noted that the future price-to-earnings ratios of several AMCs have dropped significantly, indicating potential for recovery. They believe that as disposable incomes rise, mutual fund inflows should stabilize in the medium term. InCred has maintained positive ratings on several AMCs. For instance, they have updated their target price for Nippon Life India Asset Management to ₹780 and upgraded HDFC AMC to an 'add' rating with a new target of ₹4,600. They also retained 'add' ratings for Aditya Birla Sun Life AMC and UTI AMC, with minor updates to their target prices. Overall, while the market may still experience volatility, InCred sees a possible turnaround for established AMCs.