Release Date: April 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- HDFC Asset Management Co Ltd (NSE:HDFCAMC, Financial) reported a 35% year-over-year growth in revenue from operations, reaching INR34,980 million.
- The company's operating profit for FY25 increased by 43% year-over-year, totaling INR27,261 million, with an operating profit margin of 36 basis points of AUM.
- The company achieved a significant milestone by crossing INR7.5 trillion in overall AUM, with a market share of 11.5% and 12.7% excluding ETFs.
- Individual investors contributed 70% to the company's monthly average AUM, significantly higher than the industry average of 60%.
- HDFC Asset Management Co Ltd (NSE:HDFCAMC) expanded its physical presence by adding 50 new offices over the past 15 months, bringing the total to 280 offices, with 196 located beyond the top 30 cities.
Negative Points
- The revenue yield declined by about 100 basis points in the quarter, attributed to a mix change.
- The company announced a new ESOP plan, which could potentially increase costs, although the specific financial impact is yet to be determined.
- SIP ticket size showed a decline of around 10-12% on a year-over-year basis, indicating potential softness in incremental volumes.
- The company's SIP market share has been soft over the last two quarters, with a decline in the number of new SIP registrations.
- There is a concern about higher SIP stoppages compared to new creations, which could impact future SIP flows if the trend continues.
Q & A Highlights
Q: Can you explain the decline in revenue yield this quarter? Is it due to a change in mix or other factors?
A: Navneet Munot, CEO, explained that the management fee remains consistent across direct and regular plans. The decline is primarily due to a slight change in the asset mix, with equity at 58 basis points, debt at 28 basis points, and liquid at 12 basis points. The revenue margins have been stable over the past quarters, with minor fluctuations due to asset mix changes.
Q: Could you provide details on the new ESOP plan and its cost implications?
A: Navneet Munot, CEO, stated that the company is seeking shareholder approval for a new ESOP plan, which includes 25 lakh shares. The vesting will be deferred over four years, and the plan aims to align employee interests with long-term business outcomes. The cost implications will be determined by the Nomination and Remuneration Committee (NRC) over time.
Q: How have retail and HNI customer behaviors differed in the equity segment during market volatility?
A: Navneet Munot, CEO, noted that despite market volatility, both retail and HNI segments have shown resilience. The industry has seen consistent SIP flows, and redemption rates have declined, indicating investor confidence. The company has observed a steady commitment to long-term investments across both segments.
Q: What is the company's strategy regarding cash balances and investments in alternative funds?
A: Navneet Munot, CEO, and Naozad Sirwalla, CFO, explained that the company prioritizes returning value to stakeholders and has a high dividend payout ratio. They are investing in their own schemes and have committed capital to seed their fund of funds and upcoming credit fund. The company is also open to strategic M&A opportunities.
Q: Can you comment on the trends in SIP closures and new registrations?
A: Navneet Munot, CEO, addressed concerns about SIP closures, emphasizing that the overall SIP collections remain strong, with only a slight dip from peak levels. The company has seen a robust 35% YoY growth in SIP contributions, reflecting investor maturity and confidence in systematic investing.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
