Profit after Tax of HDFC AMC is down by 3% YoY at Rs.359.7 Cr in Q3 FY22 due to higher employee benefit expenses and higher pressure on margins Q3 FY22 Earnings Call Highlights

Financial Highlights

• Company reported a net profit of Rs. 359.7 Cr in Q3 FY22 as compared to Rs.369.4 Cr in Q3 FY21, down 3%.
• Operating Profit has shown a growth of 8% from Rs.369.7 Cr in Q3 FY21 to Rs. 398.9 Cr in Q3 FY22.
• Profit Before Tax was up 0.5% YoY from Rs.482.8 Cr to Rs.485.1 Cr

Business Highlights

• QAAUM increased from Rs.406,800 Cr in Dec-20 to Rs. 436,700 Cr in Dec-21. In the last one year, it has lost 2% market share of actively managed equity schemes, which are more profitable. This could be due to the poor performance of equity schemes. Overall market share has consistently declined from 14.5% in Jun-20 to 11.7% in Dec-21. However, it has maintained its debt market share well.

• HDFC AMC remains among the most preferred choice among individual investors with a market share of 12.6% of individual monthly average AUM as of Dec-21. In Dec-20, it was 13.8% and in Sep-21, it was 12.8%.

(Source – HDFC AMC Investor Presentation)

• Two new products were launched in Q3 FY22 - Actively managed multicap fund (AUM of Rs.4340.9 Cr as on Dec-21) and Nifty Next 50 Index Fund (AUM of Rs.304.9 Cr as on Dec-21).
• Ratio of equity-oriented AUM to non-equity-oriented AUM is 47:53 which is similar to industry ratio of 47:53.
• B-30 locations contribute to 15.6% of monthly AUM.
• Individual investors contribute to 59% of company’s total monthly AUM as compared to 55% for the industry.

Earnings Call Highlights

• Performance – Revenue from operations increased due to an increase in AUM as well as more remunerative mix with a higher % of equity AUM. This increase was tempered by dilution in margin of some schemes. The company is in process of expanding its product bouquet due to which there is an increase in expense on new fund offers. There has also been an increase in Routine business development expenditure as the business move towards normalization. Employee benefit expense have increased as the company has resumed its practice of annual increment.
• Future Plans - Company has announced in Dec-21 to launch its wholly-owned subsidiary in GIFT City in the upcoming financial year subject to regulatory approval. It will launch multiple funds to cater to international investors through this company.
• CFO resigned – CFO of HDFC AMC, Mr. Piyush Surana has resigned and will be relieved from duties on 31^st Jan 2022.
• Fintechs have registered over 6 million SIPs in 1^st nine months of FY21 and technology funds are the highest selling products on these platforms. HDFC AMC does not have a technology fund.
• Product pipeline – Company has got approval for 2 index products – Nifty 100 and Nifty Equal Weight which they will be launching soon. They have also got approval for 9 ETFs which will be launched in the coming quarters
• Other Plans – Company is exploring ETFs on the debt side and would also like to be have silver ETF. It also proposes to launch sector and index funds. Overall, they would like to be a relevant player on passive side and a dominant player on the active side.

Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell stocks or MF.