Whatās ur latest take on Hdfc AMC quarter resultsā¦ Markets are much worried as they are continuosly loosing market share.
Market share gains and losses are part and parcel of this business. It can be due to lot of factors such as underperformance in MF schemes, inferior inflows and SIPs.
From the presentation submitted by the company, inflows through systematic transaction looks stable.
And overall market share ex ETF for quarterly average AUM looks stable.
Why is the market really worried?
It is due to loss in actively managed equity schemes market share.
But there is still growth in AUM. So if you believe that the finalization of savings will continue, then this stock can be a good proxy to play that theme.
This news, if materialised,will impact not just HDFC AMC but also other mutual fund houses as well. Aditya Birla MF is coming with IPO in the coming days.
With more and more players coming in this sector, it is going to be crowded. The under penetration of mutual funds in India can be a big growth driver for this sector. Many new fintech players are showing their interest in this industry. Zerodha have already applied for the mutual fund license. Angel broking have announced in Q4FY21 concall that they will file soon for the license. Indiabulls have sold itās mutual fund business to Groww(Nextbillion technologies). Aditya Birla AMC IPO is also coming.
Smallcases are also competing with the mutual fund houses.
Bajaj finance has also filed for mutual fund business.
Applying for business and surviving in business both are different let see. How many can swim for how long
Disc: Invested
In India, MF industry needs a massive awareness campaign.
With all these players joining in, the same should accelerate.
This should be a good sign for the entire Industry. Remember ā¦its so damm under penetrated.
Disc : invested, biased.
As of March 2021, Indiabulls had 663 cr AUM. Groww paid 175/663 = 26% of AUM & Sundaram paid 338 cr for 7768 cr AUM as on march 2021 (5% of AUM) . Might more smaller consolidate?
Disclosure- invested
[[Indiabulls signs Rs 175 cr deal with Groww to exit mutual fund business]]
https://www.thehindubusinessline.com/markets/stock-markets/sundaram-mf-buys-principal-amc-in-india-for-undisclosed-sum/article33686839.ece#:~:text=Sundaram%20Asset%20Management%20Company%2C%20a,this%20in%20equity%2Doriented%20schemes.
May be smaller will consolidate but 175 cr is also highlights cost of entry for new competitors.
There are established fintech players such as Paytm, Zerodha, Bajaj etc. which will be entering this space.
May be these new players will pick up weaker/smaller existing players but they will also bring more competitive intensity in this industry.
With declining market cap of the PSU in the listed domain, passive funds will garner increasing market share of the AUM and hence compress expense ratios and margins for active fund houses such as HDFCAMC.
Yes the competition will be healthy competition, but after Franklin fiasco the investor are happy with less return but need safety. HDFC have a clear edge on liquid fund though they are less profitable. But investor have much faith on HDFC Amc over new upcoming brands.
Company has investments of about 4,753 Cr, any idea where this investment amount goes ? What are the securities or type of those investments ?
Had read in one of the call transcripts that it is invested in their own debt or low risk funds.
Not sure though. I am sure it will be in Their AR Though.
Incidentally motilal oswal has a similar cash balance which is Invested in their equity portfolios. I think that is an underappreciated kicker.
Hdfc might be holding it in lower risk funds possibly to buy out other AMCs that are looking to sell out ( L& t and IDFC for e g )
They have been ask d many times on the need to hold so much cash since they are an asset light business
Incidentally 4753 cr is approx 7-8 percent of market cap
Good thing reserves have increased > 4X in last 4-5 years, bad thing is they havenāt been able to utilized it to generate better ROI , on top of that acquisitions usually come at high expense. Would be happy if they can do buyback at least at some point.
Advantage to HDFC AMC here.
Discl - Invested
Looks like HDFC AMC is still losing market share. ICICI Pru MF has taken over no. 2 spot. SBI MF has leapfrogged to no .1 position during last year mainly thanks to the ETF inflow.
Wondering whatās happening at HDFC AMC now and what would be the strategy for market share gain by the new CEO?
When Ms. Vibha took over as CEO of HDFC LIFE, there was stiff competition from SBI Life. But they were able to manage that well. Need something similar for AMC too
In case of Life Insurance, the market share is not as dependent on market valuing your portfolio stocks, while in an AMC it does look dependent on market forces moreā¦as your portfolio stocks doing well may have ripple effect on your market share.
Portfolio stocks not doing well for short, medium term can be because of a different strategy/approach but unfortunately it affects your market share if you are an AMC.
HDFC AMC may have realized this and hence there was management changeā¦
In isolation, HDFC AMC management did not do anything wrong other than believing in some shares which did not do as well over medium term which resulted in impatient investors switching over or joining other AMCā¦I think this maybe a temporary blip as change of management shows HDFC AMCās intent to change its approachā¦
Disc: Invested in HDFC Midcap fund and HDFC AMC stock, maybe biased. Would have invested in SBI AMC as well if it was available as pure play.
Source: https://www.bseindia.com/xml-data/corpfiling/AttachLive/edfd4a5a-de2f-4433-98ef-9865c3c75053.pdf
What are you trying to say here? Can you please add some comments.
Past conversation were focussed on capital allocation , so thought to share latest update where the capital has been allocated , looks like most is in mutual fund, however it doesnāt show what category of MFs.