Stock of the day report

1. 24 September 2019
HDFC AMC

2. 1
Highlights of Q1FY20 consolidated financials
•Cash ADTVs (ex-prop) growth remains soft at 3.9/- 11.4% YoY/MoM. Cash ADTV growth in 1QFY20 was
3.0/0.9% YoY/QoQ.
•Whereas derivatives ADTV growth continues to remain very strong at 81.9/17.0% YoY/MoM. In 1QFY20
growth was 69.5/26.5% YoY/QoQ.
•Delivery volumes share in 1QFY20 was at 24.3% (-210/-60 bps YoY/QoQ).
•Share of F&O in the overall mix has been consistently rising. Historically F&O in the mix has been at
94.0/95.2/95.5% in FY17/18/19 respectively. Even within F&O volume growth has sharply been for options
(see chart) where yields are significantly lower than futures.
•The financial performance of the sector shall continue to remain under stress as traditional brokers with
credible names like Axis Securities and Angel Broking have moved to fixed/subscription based business
models.
•Commission payouts for RNAMC have reduced by 16bps over 1HCY19 vs. 29bps for HDFCAMC.
HDFC AMC
key Points
• Over the years the company has demonstrated robust financial performance.
• During the period FY14-18, HDFC AMC’s revenue grew at a CAGR of 20% over FY14-18.
• This growth was largely on account of robust AUM growth of 28% CAGR during the same period.
• In the profitability front the company enjoys superior margins as equity oriented schemes (51% of FY18
AUM) generally have higher fee structure.
• In the last 5 fiscals the company has reported a healthy average EBITDA margin of 53% and currently it
stood at 55%.
• Aid by robust topline and stable margins, the company’s PAT has grown at 19% CAGR over FY14-18 with an
average PAT margin of 39%.
24-Sep-19

3. 1
Maintain leadership position in the Indian MF Industry
• The company has been a leader in the Indian mutual fund industry in terms of profitability, equity oriented
AUM size and total average AUM.
• Through organic growth and acquisition of Zurich India and Morgan Stanley MF, the company have grown to
one of the top 2 AMCs in the country with an AUM of about Rs3tn.
• HDFC AMC’s AUM has grown at a CAGR of about 26% over FY13-18. As on March 2018, the company is
commanding a significant AUM market share of around 14% in the industry.
• HDFC AMC enjoys large share of high yielding equity assets in the AUM mix with equity oriented funds
accounting for 51% of AUM as compared to 43% for the industry.
• Further, the company has highest share of individual customers of 15.7%. HDFC AMC’s live accounts has
grown at a healthy rate of 10% CAGR over FY13-18 and currently stood at 8.10mn as on March 2018.
• In terms of profitability, the company has been reporting the best numbers in the industry owing to
operating efficiency. For FY18, HDFC AMC had reported PAT/AUM ratio of 0.25% while the other top 5
players had reported the same in a range of 0.14% to 0.21%.
HDFC AMC
Indian MF Industry
24-Sep-19

4. 2
HDFC AMC
Past trends and future outlook of MF industry in India.
The mutual fund industry’s AUM grew at a CAGR of 25% from Rs7tn as of March 2013 to Rs21.4tn as of March
2018, led by strong investor inflows. Supported by strong inflows, growing participation from individual
investors and market outperformance, the industry’s assets surged 42.3% in FY17 and 21.7% in FY18. Between
March 2013 and March 2018, the AUM of equity-oriented funds grew at a CAGR of 37.3% from Rs1.9tn to
Rs9.2tn faster than the debt segment CAGR during the same period. The ETF segment also saw robust
growth, because of recent move by the Employees’ Provident Fund Organisation (EPFO) to invest a portion
(currently 15%) of the corpus in equities. The AUM of liquid/money-market funds too grew at a rapid pace of
29.1%, supported by corporate investments and stable returns. Systematic wealth accumulation has gained
significance in the recent months, especially among individual investors. The SIP book size increased from
Rs31.2bn as of April 2016 to a whopping Rs71.2bn as of March 2018. This is a huge positive for the mutual fund
industry, as SIPs aid in building a healthy long-term asset base.

5. 3
HDFC AMC
24-Sep-19

6. 4
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