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HDFC AMC: CMP: 4604 Sales Gr: Long term: 11% | H1_FY25: 37% Result Update
(Strong AUM growth helped grow strong sales and Profits)
#### About the Company:
HDFC Asset Management Company Limited (HDFC AMC) 3rd Largest asset management company in India only after SBIAMC & ICICI AMC. It provides asset management services to HDFC Mutual Fund and offers portfolio management and advisory services. The company operates with a strong network of branches and distribution partners, serving a wide range of investors across the country. It was incorporated on 10th December 1999 and was approved to act as an Asset Management Company for HDFC Mutual Fund by SEBI on 3rd July 2000.
#### Industry Outlook for Growth:
The asset management industry in India is poised for robust growth driven by increasing retail participation, a growing middle class, and rising awareness about investment options. The mutual fund industry, particularly equity-oriented funds, is expected to continue its growth trajectory. Industry which was mere 9 Lakh Cr just 10 Years back, today industry has grown to 68 Lakh Cr and today individual AMC like SBI is having more than 9 Lakh Cr. We may see 3 Companies SBI AMC, ICICI AMC and HDFC AMC reach to the same level. Industry expanded by 6-7X during the last 10 years which is 20% CAGR. Total folio’s which were just 4 Cr have today crossed 20 Cr in the last 10 years. SIP flows of the industry reached 24500 Cr/Month v/s 14700 Cr last year. SIP AUM grew by 57% this year reaching 12.4 Lakh Cr. SIP accounts have reached 9 Cr.
#### Peer Group Comparison:
- **HDFC AMC**: AUM of 7.7 Lakh Cr and are No#3 AMC as per AUM which is 17% CAGR growth during the last 12 Years.
- **Peer Group**:
- **SBI Mutual Fund**: AUM of 9.9 Lakh Cr and are No#1 AMC as per AUM which is 28% CAGR growth during the last 12 Years.
- **ICICI Prudential Mutual Fund**: AUM of 8.4 Lakh Cr and are No#2 AMC as per AUM which is 21% CAGR growth during the last 12 years.
#### Historical Performance:
- **FY_2005**: AUM near to 15000 Cr, Sales of 100 Cr and Profits of 32 Cr.
- **FY_2014**: AUM near to 1.5 Lakh Cr, Sales of 900 Cr and Profits of 400 Cr.
- **FY_2018 Pre_IPO**: AUM 2.9 Lakh Cr, Sales of 1800 Cr and Profits of 700 Cr. We have recommended this company during the IPO as the wealth creator for the future considering strong growth and consistent profits.
- **FY_2024**: AUM 6.1 Lakh Cr, Sales of 2600 Cr and Profits of 2000 Cr.
We saw strong 15% plus growth in AUM during the last decade. AUM growth should help strong revenue growth but there were some Reforms in the industry affecting Revenue during the last few years. Hence the low growth of just 6% was seen during the last 5 Years despite good 12% AUM growth. Hence since IPO we saw average growth of near to double digit which was not so strong and as assumed.
#### Current Trend:
Since last year again we saw strong growth in revenue and Profits which helped HDFC AMC recover from long correction. The new lifetime high was seen after the long 4 years of muted phase. We are expected next few years with strong AUM growth and hence good revenue and profits growth is expected.
**Latest financial results of HDFC Asset Management Company (HDFCAMC) for H1 FY25**
### **AUM Growth During H1 FY25 vs Last Year (H1 FY24)** 📈
- **AUM (Assets Under Management):** HDFC AMC reported a closing AUM of ₹7,686 billion in Q2 FY25, up from ₹5,229 billion in Q2 FY24, reflecting a **47% YoY growth**.
- **Equity-Oriented AUM:** Closing AUM for equity-oriented schemes was ₹5,205 billion, up from ₹3,002 billion in Q2 FY24, showcasing a **62% YoY growth**.
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### **Market Share (H1 FY25 vs H1 FY24)** 🏆
- **Overall Market Share:** HDFC AMC's overall QAAUM market share was 11.5% for Q2 FY25, compared to 11.2% for Q2 FY24, showing a slight improvement.
- **Equity Market Share:** It maintained a 12.9% market share in actively managed equity mutual funds in Q2 FY25, reflecting consistency.
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### **Income Growth During H1 FY25 vs Last Year (H1 FY24)** 💰
- **Revenue from Operations:** HDFC AMC's revenue from operations for H1 FY25 stood at ₹16,625 million, a **37% increase** compared to ₹12,176 million in H1 FY24.
- **Total Income:** Total income increased by **34%** to ₹20,062 million in H1 FY25 from ₹14,978 million in H1 FY24.
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### **Profitability Ratios Comparison (H1 FY25 vs H1 FY24)** 📊
- **Profit Before Tax (PBT):** PBT increased by **39%** to ₹16,111 million in H1 FY25 from ₹11,605 million in H1 FY24.
- **Profit After Tax (PAT):** PAT rose by **29%** to ₹11,808 million in H1 FY25, compared to ₹9,151 million in H1 FY24.
- **Operating Margin:** The operating margin for Q2 FY25 was **36 bps**, a slight increase from Q1 FY25, indicating stable efficiency.
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### **Other Key Ratios** 📑
- **Return on Equity (ROE):** HDFC AMC’s ROE for FY24 was 29.5%, and this has been maintained in FY25.
- **Dividend Per Share:** The company declared an interim dividend of ₹70 per share in H1 FY25.
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### **Industry Overview** 🌐
- The mutual fund industry saw **significant growth** in equity-oriented schemes, with equity as a percentage of total AUM increasing from 56% to 61% YoY.
- **Individual investors**' participation continues to rise, with individual folios contributing 62% of MAAUM in September 2024.
#### Conclusion:
Considering the strong growth of AUM, Sales and Profits in the continuity we may see 35% growth in AUM and near to 30% Sales, while 23% growth in Profits. New buying again can be done during any fall near 3845 while targets for this year could be kept at 6802 where some 5% profits can be booked.
#### Company's Future Outlook:
- The outlook for HDFC AMC remains **positive** due to:
- **Rising AUM** and an increase in equity participation.
- Continued focus on growing its retail customer base through digital platforms.
- A strong **SIP book** (₹1,786 billion AUM), with systematic transactions expected to provide **stable future cash flows**.
- The company is also focused on embedding **ESG principles** and diversifying its product offerings, including alternative investment funds and international business.
This combination of strong financial growth, a leading market position, and an expanding SIP base positions HDFC AMC well for future expansion.
We may see HDFC AMC reach towards 15 Lakh Cr AUM till FY_2035 with the revenue of 5800 and profits of 3700 Cr. Such a growth can give a multiyear rally along with high and consistent dividends yield for investors.
#### Share holding:
HDFC Bank is the promoter of this Company with around 53% stake whereas FII holds around 16.11% stake. MF & Insurance companies hold around 21%.
#### Disclosure: Do Not Buy or sell before checking the data on your own as the writer may have the position in the above-given stocks or indices
