If you are searching for big potential returns for your portfolio, then HMC Capital Ltd (ASX: HMC) shares could be worth considering.
That's because the team at Macquarie Group Ltd (ASX: MQG) believes that this ASX 200 stock could be heading materially higher from current levels.
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What is the broker saying about this ASX 200 stock?
Macquarie notes that the investment company has reaffirmed its guidance for FY 2026. It said:
FY26 pre-tax OEPS guidance reaffirmed of at least 40cps (MRE: 33cps; VA: 38cps). Conservatively, we exclude the 8.5cps Neoen arranging fee.
The broker also highlights that there are some key concerns, which have been weighing on its share price, that should be addressed in the next 6 to 12 months. It adds:
Key concerns to be addressed over the next 6-12 months, according to HMC. This is needed to restore market confidence. Key items include: 1) resolution of Healthscope (incl any rent-reset); 2) advancing the selldown of the Australian data-centre platform and US operational assets; and 3) third-party capital partnering to sell-down HMC's balance sheet exposure across energy transition.
But the main reason to be positive is its valuation. The broker points out that the ASX 200 stock is trading at a discount to its net tangible assets (NTA) and believes that little value is being placed on its funds management platform. Macquarie explains:
Trading 8% below NTA of $3.24ps with limited value ascribed to the funds management platform. We believe this is overly negative in the context of our 10% EPS CAGR forecast (which is conservative based on HMC's AUM targets, although some conservatism is currently warranted). We estimate +150% valuation upside if HMC can re-rate to comps trading on 20x active EBITDA, and +64% on our current valuation (10x).
Big potential returns
As mentioned above, Macquarie believes this ASX 200 stock could rise over 150% if it can re-rate to comparable multiples.
However, for now, the broker has reaffirmed its outperform rating and $4.90 price target on HMC Capital's shares.
Based on its current share price of $3.18, this implies potential upside of 54% for investors over the next 12 months.
It also expects dividend yields of approximately 4% for FY 2026 through to FY 2028.
Commenting on its outperform recommendation, Macquarie said:
Outperform, $4.90 TP. Line of sight on HMC's $50bn 3-5 year AUM target has turned opaque over the past year given numerous challenges. However, this is more than captured in the share price with the stock trading on 10x FY26E P/E (LTA 23x). Execution on key concerns over the next 6-12 months is key.
Catalysts: Potential removal from S&P/ASX 200; Neoen sell-down targeted for 2H26; Healthscope resolution; sell-down to third-party capital at DGT; evidence of AUM growth towards HMC's $50bn 3-5 year target.
