5 Takeaways from HDFC AMC's Q1 Results

HDFC AMC has reported its earnings for the quarter ended June 2022.

In an otherwise strong market, share price of HDFC AMC was under pressure throughout the day.

While the weakness in share price may not be because of the results, it can be due to Prashant Jain stepping down as the chief investment officer (CIO) of the company.

Prashant Jain is one of India's longest-serving fund managers and the only one to have managed a mutual fund scheme since inception for 28 years.

He was responsible for overseeing total AUM of Rs 4.1 tn as of June 2022 and directly managing over Rs 1 tn under four equity schemes.

Coming back to HDFC AMC's earnings...

HDFC AMC share price is falling for quite some time now.

Despite being a fundamentally strong stock, having a rock-solid balance sheet, and good growth prospects of the India's mutual fund industry, shares of HDFC AMC continue to reel under pressure.

Investors were curious to know what the biggest AMC had to report in the quarterly report card.

Here are five key takeaways from HDFC AMC's Q1 results.

• HDFC AMC's net profit for the quarter ended 30 June 2022 came in at Rs 3,142 m, a decrease of 9% over the same quarter a year ago.
  
  The profits were lower due to a fall in other income.
• Operating profit for the quarter ended June 2022 was Rs 3,737 m as compared to Rs 3,652 m for the quarter ended June 2021. This is an increase of 2%.
• The quarterly average assets under management (QAAUM) came in at Rs 4,153 bn compared to Rs 4,169 bn for the same quarter a year ago.
• HDFC AMC has a 11% market share in QAAUM of the mutual fund industry.
• HDFC AMC has a market share of 12.6% of the individual monthly average AUM in the industry.

The road ahead for HDFC AMC

As number of participants in the stock market increases, asset management companies (AMCs) like HDFC AMC are likely to benefit.

HDFC AMC, being a leader in the Indian mutual fund industry, has been the most profitable AMC in India since 2013. The company also enjoys strong patronage of the HDFC brand.

Also, given the industry's low penetration levels vis-a-vis developed countries, the industry has tailwinds in its favor.

Mutual fund AUM as a percentage of GDP is much lower than the world average. So there's headroom for growth in the long run.

Apart from this, the company also stands to benefit from the HDFC-HDFC Bank merger.

While the merger will improve the entity's ability to cross-sell products to a wider customer base, the move can help HDFC AMC leverage the distribution network across urban, semi-urban and rural geographies.

How HDFC AMC has performed recently

As we mentioned earlier, HDFC AMC share price is falling for months now. This is due to various reasons.

Persistent selling by FIIs, the company's exclusion from MSCI index and its market share on a decline being the prime reasons.

Latest shareholding pattern of HDFC AMC shows FIIs sold a huge chunk of their holdings in the most recent June 2022 quarter.

Even popular fund manager Saurabh Mukherjea exited his position in HDFC AMC recently. (Saurabh was on Equitymaster's investor hour podcast recently. Check out his podcast here).

Owing to all these reasons, shares of HDFC AMC have declined over 20% in 2022.

To know more, check out HDFC AMC's 2021-22 annual report analysis.

About HDFC AMC

HDFC AMC is an investment manager to HDFC mutual fund. The company has a diversified asset class mix across equity and fixed income/others.

Promoted by HDFC in 1999, Standard Life Investments (SLI) acquired 26% stake in HDFC AMC in 2001, and now the company operates as a joint venture between HDFC and SLI.

Through organic growth and acquisitions, such as Zurich India and Morgan Stanley MF, the firm has grown to one of the top two AMCs in India.

To know more about the company, you can check out HDFC AMC company fact sheet and HDFC AMC quarterly results.

Also check out HDFC AMC's news and analysis.

You can also compare HDFC AMC with its peers.

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