HDFCAMC - HDFC Asset Management Company Limited Share Price

The management of HDFC Asset Management Company Limited provided an optimistic outlook during the Q4 FY25 earnings call. The company reported an AUM of Rs.7.5 trillion, with an 11.5% market share and 12.7% market share excluding ETFs on a QAAUM basis. Equity-oriented assets accounted for Rs.5 trillion, representing 64% of their quarterly average AUM, surpassing the industry average of 56%.

For FY25, the company's revenue from operations reached Rs.34,980 million, reflecting a 35% year-over-year growth. The operating profit stood at Rs.27,261 million, a 43% increase, and the PAT reached Rs.24,609 million, marking a 26% rise year-over-year. The board has recommended a dividend of Rs.90 per share, up from Rs.70 per share the previous year, resulting in a dividend payout ratio of 78%.

Management also noted significant investor behavior trends, explaining that the industry added 9.7 million new investors, of which HDFC added 3.5 million. Monthly SIP flows peaked at Rs.265 billion in December 2024 and were Rs.259 billion in March 2025, an increase from Rs.193 billion in March 2024. The company expanded its physical presence significantly, adding 50 new offices over the past 15 months, bringing the total to 280 offices.

On alternative funds, management indicated they are actively launching new products, including a credit fund and enhancing their wholly-owned subsidiary, HDFC AMC International (IFSC) Limited, which launched three funds. Management affirmed a commitment to maintaining a strong balance sheet, potentially leveraging cash reserves for strategic growth opportunities, including M&A activity.

Forward-looking points include expectations for continued strong investor participation, expansion in alternative investment funds, and ongoing efforts to enhance digital capabilities, with 94% of transactions now processed digitally. Management expressed confidence in maintaining growth despite market volatility, reflecting a commitment to long-term investor engagement.

1. Question: Lalit Deo from Equirus Securities asked about the decline in revenue yield, questioning whether it reflects a mix change or other factors. He also inquired about the ESOP scheme implications.

   • Answer: I explained that the management fees are consistent across both direct and regular plans, so that isn't impacting yields. For this quarter, revenue margins for equity were 58 bps, and our numbers were fairly stable compared to last quarter. Regarding the ESOP, we seek shareholder approval for a new scheme involving 25 lakh shares, focusing on aligning talent with our goals. The vesting will differ from the previous scheme, emphasizing long-term performance.

2. Question: Shreya Shivani from CLSA India asked about customer behavior trends among retail and HNI investors, pointing out similar contractions and volatility's impact.

   • Answer: I highlighted that despite market volatility, net flows for equity-oriented funds remained strong with 2.74 trillion in the second half. While HNIs often react faster, we see resilience among investors. SIP contributions have shown stability, indicating a long-term investment orientation among retail. I underscored that overall, investors appear committed to disciplined investing despite market conditions.

3. Question: Ronak Chheda from Awriga Capital inquired about using cash balances for the alternative business and upcoming opportunities.

   • Answer: I mentioned our strategic approach to cash management; we've focused on returning value to stakeholders, achieving a 78% payout ratio. We're planning to use cash for anchor investments in our emerging alternate fund side, having closed our first Cat II AIF Fund of Funds with good response, along with our upcoming credit fund under the alternate platform.

4. Question: Bhavin Pande from Athena Investments asked about the rise in direct AUM distribution and what that means for HDFC AMC.

   • Answer: The increase in direct channel AUM is mainly due to tech platforms and RIAs, resulting in a market share growth from 25% to 27.8%. This trend reflects lower total expense ratios (TER) in direct plans. The market share in terms of flows remains strong, driven by our investment team's performance amidst volatility.

5. Question: Dipanjan Ghosh from Citigroup raised queries regarding SIP ticket sizes and OPEX guidance considering ESOP impacts.

   • Answer: I clarified that our reported SIP data includes both SIPs and STPs, and that the decline largely arises from STP variations. On OPEX, while the ESOP impact is non-cash, overall guidance remains 10-15%, focusing on building capabilities despite adjustments based on future volumes. Caution is advised as AUM growth may affect this over time.

6. Question: Prayesh Jain from Motilal Oswal asked about trends in SIP closures and debt segment performance.

   • Answer: I reassured that despite slight SIP closures, monthly SIP collections remain robust at 25,900 crores, reflecting strong investor sentiment. On debt funds, positive flows have been seen this year, aided by awareness efforts. I'm optimistic about improving retail interest in debt products amidst ongoing campaigns to address market volatility.

7. Question: Gaurav Sharma from HSBC asked if there were shifts in fund preferences among investors.

   • Answer: I noted that while investors might not frequently switch categories, market conditions do influence trends. Currently, there's a higher inclination toward flexi-cap and large-cap funds, evident in our flows. For specialized investment funds (SIFs), we are actively preparing to introduce products in line with regulatory frameworks to meet investor needs.

8. Question: Mohit Mangal from Centrum Broking asked about future tax rates and branch expansion.

   • Answer: I noted that our current tax rate is affected by capital gains adjustments in the budget, aligning closer to corporate tax rates. Future guidance remains uncertain. As for branch expansion, we will continue to assess opportunities based on geographical potential, though last year we successfully opened 50 branches across the country.

Each response adheres to the respective question while covering the main points, context, and future considerations raised during the Q&A session.