HDFC AMC’s ‘near perfect’ Q2 a big hit

livemint.com:

₹2,910 apiece on Friday. The September quarter (Q2FY24) results have brought cheer. Kotak Institutional Equities analysts point out, “HDFC AMC’s Q2FY24 results were near perfect, with both headline/core earnings up 20% year-on-year along with strong operating metrics such as fund performance, customer addition, SIP flows and yield expansion." HDFC AMC’s Q2 profit stands at ₹438 crore.

The striking factor is that the equity segment has done well and its share in the asset mix has inched up. For AMCs, equity has higher margin in the assets under management (AUM) mix. In Q2, share of equity in HDFC AMC’s quarterly average AUM grew to 57.6% from 51.9% a year ago and 54.2% a quarter ago.

Despite the ongoing uptrend in the Indian stock markets, the share of equity in the mix rose due to more money flowing in. Thus, the share of liquid and debt schemes in the asset mix, fell in Q2. Increasing equity mix has fuelled HDFC AMC’s blended revenue yields to 49 basis points (bps), up 2 bps sequentially.

Overall, HDFC AMC saw 22% year-on-year growth in quarterly average AUM led by 36% growth in equity AUMs. Investors seem pleased, taking the shares up by almost 4% in the past two trading days. To be sure, the HDFC AMC stock has outperformed peers in the past one year, rising by 49%, gaining the most in the latter part of this period.

“HDFC AMC stock has seen a sharp bounce back since the lows seen post Sebi discussion paper on proposed TER (total expense ratio) changes given that Sebi has indicated that a revised discussion paper is in works," said a report by JM Financial Institutional Securities. An adverse change in TER would have hit revenue and yield for all AMCs, with larger companies getting affected more. Investors are relieved