HDFC Asset Management Company conducted a conference call on 19 April 2024 to discuss the financial results for the quarter ended March 2024. Navneet Munot, MD&CEO of the company addressed the call:

Highlights:

The company concluded the year with an AUM surpassing Rs 6 lakh crore, showcasing a growth of 39% yoy with a higher tilt towards equity-oriented assets.

During FY24, the company expanded its product offerings in sectoral or thematics space by launching 5 new funds. On passive front, the company announced launching 5 index funds and 2 ETFs.

Systematic transactions saw flows adding up to Rs 2390 crore in March 2024 up from Rs 1710 crore in March 2023. SIP AUM now represents 37% of actively managed equity-oriented AUM, which more or less in line with that of the industry.

The company witnessed healthy growth in unique investor accounts. The company saw addition of 3 million new customers during FY24, and the total number of unique investors now stands at 9.6 million with 16.6 million live accounts.

For FY24, industry added 6.9 million unique investors, of which 3 million were added by the company.

The company continues to hold the pole position when it comes to market share in individual investor AUM and second highest in terms of B30 AUM.

The operating profit margin of the company has been stable at 35 basis points.

The effective tax is lower, primarily due to a decrease in deferred tax charge for the current quarter, mainly attributed to the holding period of certain investment, transitioning from short term to long term.

The management fees on equity segment stands at around 59 basis points, 27-28 basis points for debt and 12-13 basis points for liquid.

The ESOP cost was about Rs 47 crore in FY24. This is a non-cash charge. ESOP cost for FY2025 is estimated at Rs 20 crore.

The revenue to average AUM ratio is expected at 47 bps.

The company has added 24 new branches in FY24 taking the presence to 254 locations, of which 174 branches are in B-30 locations with most of the new branches in B-30 locations. The company will continue to invest in both physical and digital infrastructure.

The relationship with HDFC Bank is progressing pretty well and teams are engaging across all levels to have a greater synergy and to leverage the most from the potential that has arisen.

The company managed cost well over the last several years. Prudent spending is well in trend in culture of the company.

The focus is to create a top-of-the-line asset management company over time.

The operating expense to AUM is expected at 12 bps and EBIT to AUM at 35 bps after expecting revenue to AUM at 47 bps.

Mutual fund industry performance

The industry closed the year with AUM of Rs 53.4 lakh crore, recording yoy growth of 35%. Net flows for the year came in at Rs 3.5 lakh crore.

The largest contributor to the net flows was actively managed equity-oriented fund. They attracted Rs 2.4 lakh crore in FY24, a notable increase from Rs 1.6 lakh crore in FY23. The contribution of NFOs to this number was Rs 54600 crore.

Equity index funds saw net new flows of Rs 24700 crore.

Flows into debt funds were Rs 8300 crore and Debt ETF at Rs 10900 crore.

The industry continues to set records in terms of monthly SIP flows with overall contribution for FY24, reaching Rs 2 lakh crore as against Rs 1.6 lakh crore in FY23.

The SIP flows in the month of March 2024 reached Rs 19300 crore.

Furthermore, equity-oriented ETF attracted flows of Rs 29300 crore in FY24.