HDFC AMC Q2 Results Review - Market Rally Improves Outcomes For Now: Yes Securities

Yes Securities Report

HDFC Asset Management Company Ltd.'s revenue from operations at Rs 6,431 million was up 11.9%/18.1% QoQ/YoY, compared with growth in quarterly average assets under management of 8%/22% QoQ/YoY.

Share of equity in AUM (including hybrid funds) at 57.6% was up 340 bps QoQ and 570 bps YoY.

Share of B-30 in AUM at 18.2% was up 100 bps QoQ and 70 bps YoY.

Share of Banks, mutual fund distributors, national distributors and direct channel was 13.1%, 38.6%, 24.6% and 23.7%, respectively in Equity QAAUM.

HDFC AMC's operating profit margin for the quarter, at 75.0%, was up 40 bps QoQ and 72 bps YoY.

The calculated overall revenue yield has risen ~2 basis points QoQ to 49 bps, driven by favorable changes in segment mix:

The share of equity funds has risen 340 bps QoQ to 57.6%. The yield in the equity business was 68 bps in the sequentially previous quarter whereas this has declined to 67 bps in Q2. The reasons for decline in yield include flow yield being lower than book yield and increased assets under management causing funds to move past TER slab thresholds.

Last quarter, net inflows into debt funds were positive but were concentrated at the short-end:

The debt fund market share has improved on QoQ basis but, optically, declined on YoY basis. The YoY decline is on account of not participating in debt index funds and one should not read too much into this.

We maintain ‘Neutral’ rating on HDFC AMC with a revised price target of Rs 2,900: We value HDFC AMC at 33 times FY25 price/earning, with the implied price/book being 10.1 times.

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