HDFC AMC shares rallied 11.28% on Tuesday after Abrdn Investment sold its entire 10.2% stake through open market transactions for ₹4,079 crore. Abrdn was a co-promoter of HDFC AMC with HDFC. The stock fell 2.6% to ₹2,049 on Wednesday.
Similarly, Shriram Finance rallied 11.21% to a 52-week high on Wednesday after Piramal Enterprises sold its entire 8.34% holding for ₹4,824 crore through open market transactions. On Monday, US private equity firm TPG sold its entire 2.65% stake for ₹1,390 crore. The stock closed at ₹1,734.20.
“With the overhang of excess supply on the back burner, we believe that both HDFC AMC and Shriram Finance have all the right levers to perform going ahead,” said Swapnil Shah, director of research, StoxBox. “With continued strong SIP inflows, strong distribution network, rising market share in the AMC industry, and operational efficiencies, HDFC AMC can be a good bargain at current levels.”
Shriram Finance has rallied 26% in the past six months as against 4.6% gains in the BSE 100 index. The stock is trading 1.5 times its book, on a par with its long-term average. HDFC AMC has declined 6% in the last six months as against 4% gains in the BSE 200 index. The stock is currently trading at a one-year forward price-to-earnings ratio of 26.20 times, a discount of 25% to its long-term average. HDFC AMC is 11% below its 52-week high on December 20, 2022.Gaurang Shah, senior VP at Geojit Financial, said HDFC AMC and Shriram Finance exhibit strong growth potential on the fundamental side. “We maintain a positive outlook on both stocks from a long-term perspective.”
On Wednesday, global index services provider FTSE announced an ad-hoc adjustment for HDFC AMC and Shriram Finance following the increased free float on account of the block deals. These two stocks are expected to get an additional inflow of nearly $50 million from the passive funds on June 23, 2023.Technical analysts expect these two stocks’ rallies to continue in the short term.
“The recent uptick in HDFC AMC is supported by a noticeable surge in volumes, and we expect the rebound to extend further to ₹2,250 levels. In case of any dip, the ₹1,840-1,930 zone would provide the needed cushion,” said Ajit Mishra, SVP – Technical Research, Religare Broking.
“Shriram Finance has ended a two-year-long consolidation phase and gained nearly 25%. It might take a breather around the ₹1,850 zone, but the tone would remain positive. Traders may consider any dip around the ₹1,600-1,650 zone to initiate fresh longs.”