Release Date: October 15, 2024
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 significant growth in total income, reaching INR10,579 million, with a 38% year-over-year increase in revenue from operations.
- The company's operating profit grew by 47% year-over-year, amounting to INR6,881 million, indicating strong operational efficiency.
- HDFC Asset Management Co Ltd (NSE:HDFCAMC) achieved a market share of 11.5% with equity-oriented funds comprising 65.7% of their AUM, outperforming the industry average.
- The company has seen a substantial increase in systematic transactions, with over 10 million transactions amounting to INR36.8 billion in September 2024.
- HDFC Asset Management Co Ltd (NSE:HDFCAMC) has successfully expanded its unique investor base to 11.8 million, representing a 24% penetration in the industry.
Negative Points
- The company faced an additional deferred tax liability of INR69.75 crores due to changes in capital gains tax rates, impacting the PAT for the quarter.
- Despite positive net flows in debt and liquid funds, these were lower compared to the previous quarter ending June 2024.
- The company has experienced a decline in equity margins due to the telescopic pricing model, which continues to impact yields.
- HDFC Asset Management Co Ltd (NSE:HDFCAMC) did not have any new fund offerings (NFOs) this quarter, which affected their market share relative to competitors with active NFOs.
- The company is facing challenges in maintaining yield stability due to ongoing market dynamics and regulatory changes.
Q & A Highlights
Q: Are there any steps being taken to attract fresh investments from NRIs into Indian mutual funds?
A: Navneet Munot, CEO, mentioned that HDFC AMC has set up a wholly-owned subsidiary in Gift City, HDFCAMC International, which will soon launch products feeding into domestic mutual funds, enhancing their ability to attract investments from the global diaspora.
Q: How does SEBI's new asset class framework impact HDFC AMC, and what opportunities does it present?
A: Navneet Munot, CEO, explained that the new asset class offers flexibility and a higher risk-reward profile, allowing for innovative investment strategies. It provides an opportunity to cater to investors seeking higher risk and reward, while remaining within mutual fund regulations.
Q: Can you clarify the impact of the deferred tax liability on the company's financials?
A: Naozad Sirwalla, CFO, clarified that the deferred tax liability due to changes in capital gains tax rates has been accounted for in Q2. Going forward, the tax rate will be applied to incremental MTM gains, with no further one-off impacts expected.
Q: What is the rationale behind the recent rationalization of distribution commissions?
A: Navneet Munot, CEO, stated that the rationalization was necessary due to the telescopic pricing impact on margins. It was implemented collaboratively with distribution partners to cushion the impact of falling margins, focusing on schemes where the fall in TR was steep.
Q: How is HDFC AMC planning to expand its alternative investment business?
A: Navneet Munot, CEO, announced the successful closure of a VCP fund of fund with commitments of INR1,200 crores. The company is also developing a private credit team and anticipates launching new products in this area over the next few quarters.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
