HDFC Asset Management Company on January 21 reported a 4.26 percent sequential decline in profit at Rs 352.55 crore in the December quarter on higher tax cost but its revenue grew to Rs 524.73 crore, up 5.4 percent from the previous quarter.
The market share of assets under management (AUM) dipped to 14.3 percent in the quarter against 14.7 percent in the previous quarter. The market share of equity AUM also declined 30bps QoQ to 15.8 percent.
SIP flows dipped by Rs 60 crore QoQ to Rs 1,220 crore, but sales via national distributors jumped 250bps QoQ to 19.8 percent during the quarter.
Here are the highlights from HDFC AMC's conference call by Narnolia Financial Advisors:
The mutual fund industry reported AUM growth of 16 percent for the one year period ended December 2019, while equity-oriented AUM grew by 13 percent.
The company saw a decline in its market share from 15.8 percent to 15.6 percent QoQ, the reason was outflows from liquid funds. The redemption rate in equity was lower than that of the industry.
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Revenue increased by 6 percent QoQ despite stable AUM. It was majorly on account of the PMS fee.
During the quarter, the company added seven more B-30 locations. The company has 220 branches, of which 144 are in B-30 locations. The contribution of B-30 locations to a total monthly average AUM is 12.9 percent.
Fees and commission expenses increased to Rs 7 crore against Rs 0.8 crore in the last quarter. The increase included commission paid on segregated accounts and PMS business. The company does not see it to be a material amount going ahead.
Depreciation was high at Rs 12.7 crore; Rs 8.5 crore was on account of IND AS 116 application ie lease depreciation.
Eighteen percent of the gross flows are coming through a direct plan to the industry and the number is at 23 percent for the company, which shows the movement of investors to direct channel.
Margins in equity funds were at 80-90 bps, 35-40 bps for debt funds and 8-10 bps for liquid funds.
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