HDFC Asset Management Company Ltd. share price target

Operating profit decreased by 21.2% YoY to Rs. 301cr, with operating margin contracting 261bps YoY to 73.0%, impacted by fall in equity market. PAT reported at Rs. 302cr (+3.6% YoY) helped by higher other...

Equity flows remain subdued

HDFC AMC reported revenue decline of 18.4% YoY/down 13.6% QoQ to INR 411 Cr. EBIT declined by 15.5% QoQ / 21.1% YoY to INR 303 Cr. PAT improved 21.0% QoQ / 3.6% YoY to INR 302 Cr due to higher other income. PAT margin expanded from 52.5% in Q4 FY20 to 73.5% in Q1FY21. AUM improved 12.0% QoQ to INR 3,57,500 Cr. out of which 39% are equity oriented and 61% are non-equity oriented (Industry ratio stood at 38:62). Market share of total AUM declined to 14.0% in Q1FY21 from 14.7% in Q1FY20 Unique investors stood at 5.6 million comprising of ~26% share in the total MF industry...

Industry AUM declined to | 22.3 lakh crore as of March 2020 vs. | 26.5 lakh crore as of December 2019. Equity segment saw a decline of ~24% QoQ to | 8.3 lakh crore, led by correction in markets, debt & liquid schemes saw ~7%, ~11% QoQ decline in AUM due to outflows during the quarter. SIP...

HDFC Asset Management (HDFCAMC) reported a ~Rs 500bn sequential AUM decline in Q4FY20, largely due to the mark-to-market effect.

Rise in profits, SIP inflow declines slightly HDFC Asset Management Company Ltd. (HDFC AMC) is one of the largest asset management companies (AMC) in India, with a total asset under...

The operational performance came in healthy in the quarter. Revenue from operation came in at | 525 crore, up 10% YoY; with revenue yield reported at 57 bps. Other income came in healthy at | 67 crore. Accordingly, total revenue was at | 592 crore, up 11% YoY. Expenditure was contained at ~| 126 crore with employee expense of | 57 crore. Accordingly, expense to AUM remained steady at 14 bps in Q3FY20 vs. 13 bps in Q2FY20. The...

HDFC AMC's equity-oriented AUM grew by 11.9% YoY in Q2FY20 to Rs. 1,651bn as against industry' growth of 12.7%, thereby, reducing its equity-oriented assets from 47.7% in Q1FY20 to 45.1% in Q2FY20. Actively managed equity-oriented AUM stood at Rs. 1,637bn with market share of 15.8% in Q2FY20 vs Rs. 1,689bn in Q1FY20 (market share of 16.2%), mainly due to change in product mix. Individual investors contributing Rs. 2,180bn to the present HDFC AMC's AUM represent 57.4% share as against 54.1% for the industry, making it the most preferred choice. The company has over one-fourth of industry total unique customers (5.5mn unique customers out of...

Revenue from operation came in at | 498 crore, up 4% YoY; revenue to AUM was down 3 bps QoQ to 54 bps due to higher inflows within debt & liquid funds. Other income was at | 51 crore. Accordingly, total revenue was at | 549 crore, up 6% YoY. Expenditure was contained at ~| 122 crore with employee expense of | 58 crore. Accordingly, expense to AUM improved marginally to 13 bps vs. 14 bps in Q1FY20. The company decided to shift to a lower tax regime. Accordingly, earnings saw 79% YoY growth to | 368 crore. The company continued to maintain its overall leadership in AUM,...

We have also reviewed recent mutual fund performance and are encouraged to find thatHDFCAMC has significantly improved its performancewith 64.9% (+1,280bps vs. Oct-18) of rated AUM now outperforming (rated 4 star +). RNAMC has slipped a bit, as only 36.1% (-1,700bps vs. Oct-18) of rated AUM is now outperforming. HDFCAMC has most efficiently passed on the TER cuts to distributors. Commissions now stand at 48bps (-29bps vs. Dec-18). Life insurance and mutual funds: Despite 1Q being a seasonally slow quarter, private life insurers individual NBPs grew a strong 28% YoY to Rs 92bn. On the other hand, equity (ex arbitrage and ETF) flows for 1QFY20 were muted at Rs 83.0bn (72% below FY19 avg). Higher life insurance sales vs. mutual fund sales may owe to changes in distributor commission payouts. While asset managers are not allowed to pay upfront commissions, insurers continue to pay out heavily. Our channel checks indicate this is tempting banks/national distributors to push insurance savings products.