HDFC AMC annual report Financial Year 2021
HDFC AMC - Notes from AR 2020-21 -
- Largest equity oriented MF manager in India
AUM - 3.95 lakh cr, up 24 pc YoY
PMS AUM - 9,700 cr, up 14 pc YoY
PAT - 1325 cr, up 5 pc YoY
Unique Investors - 53 lakh, Live accounts - 90 lakh
For context - India has 2.2 cr unique investor accounts
Investor Service centers - 227, out of which - 149 are in B-30 cities ( T-30 - is top 30 cities, B-30 is beyond top 30 cities ) - Equity schemes as a percentage of total AUMs - 43 pc ( Industry avg is 41 pc ), Debt Schemes - 16 pc, Liquid Schemes - 39 pc , Rest - others
Total Equity schemes - 24
Total Debt schemes - 68
Liquid schemes - 02
Contribution to AUM from top 5 cities - 69 pc. next 10 cities - 14 pc, next 20 cities - 6 pc, Rest of India - 11 pc
Others - 07 pc
Share of Individuals in the total AUM - 57 pc
- Total MF industry at 31 lakh cr. MF AUM to GDP ratio at 15 pc vs Global AVG of 35 pc.
HDFC AMC’s mkt share in Individual segment - 13.7 pc ( highest in the Industry )
Monthly avg AUM for individual segment is at aprox 17 lakh cr. It has grown @ 22pc per yr since Mar 16
Monthly SIP flows the Industry for Mar 21 were at 9182 cr - up 3X vs Apr 16 !!!
Industry-Mar 21 vs Mar 17 AUM ( in lakh cr ) -
Equity AUM - 13 vs 6.3
Debt AUM - 10.6 vs 7.6
Liquid AUM - 4.1 vs 3.1
Others - 3.8 vs 0.5
Total - 31.5 vs 17.55
- HDFC AMC -
Annual SIP book at 11,100 cr
Of the total SIP book, 84 pc SIPs are over 5 yr old, 73 pc are over 10 yrs old !!!
FY 21 revenues at 1853 cr vs 2003 cr. Avg AUM went up. Still the overall revenues declined due lower proportion of AUMs under the Equity schemes which yeild higher management fees
Financial assets ( invetments ) held - 4753 cr vs 3944 cr last yr, out of which …amounts held in MFs - 4158 cr, amounts held in Debt securities - 522 cr
My take - the Industry structure looks poised for growth given the level of under penetration
Key risk for Industry - tech and regulatory disruptions where in lower cost models like ETFs become more popular or MF licenses are given out more easily so as to increase competition manifold
Key monitorable for HDFC AMC - recovery in the performance of their Equity schemes which can help them regain their market share losses
Disc : invested in HDFC AMC and Nippon India AMC
9 Likes
That would be because the AUM rise is due to the higher levels that the Stock Market has reached YoY
So …the real inflow of fresh investor money has not led to such high AUMs. And hence the core operating income hasn’t grown
The hope is that their Equity MFs start doing well as time passes by ( this has started happening ). This would lure fresh investors as well as encourage the existing ones to increase their SIP / Lumpsum investments
Basically…if the Indian mkts do well, it should be a matter of time before HDFC AMC starts doing well
1 Like
Hi…
I dont think that we should give buy / sell recommendations on this forum
I would only say that - yes, its not cheap. However… if their equity schemes start to perform ( likes of - HDFC Top 100 , HDFC Mid Cap Fund ) which I think should start happening this Qtr, then the stock may not get cheaper
2 Likes
@ranvir
Thank you for the detailed notes. Few more details:
Key Risk 1: Lack of revenue growth (but Premium valuations) . In the last 5-Yr, Revenue CAGR ~5% while AUM’s CAGR is 19% and PAT CAGR is ~23%
Opinion: This shall change in the coming years due to below points from the AR:
- Well incentivized MD & CEO – Paid decent one-time joining amount; Reasonably planned salary increment for FY-22 & 23, awarded substantial options in FY 21 and potential to earn a big commission up to 1% of the PAT
- Built capabilities by adding appropriate resources during the year for the Equity-Oriented Schemes
- Plan to expand our equity product portfolio to cover sector/specific themes, international markets and passive strategies
- Upskilling more than 1000 of our employees by enrolling them for CFA Foundation course
- Plan to target users with a mobile-first approach and reach out especially to millennials through customized communication across various digital platforms. In the FY 20-21, 82% of our transactions were executed digitally as against 69% in FY 19-20, and 36% in FY 15-16.
- Aim to expand our campaign communications in more local languages.
Key Risk 2: Increasing competition and future regulatory action are likely to drive down total expense ratios
Opinion: Brand trust, extensive network, existing and upcoming product suite and ongoing enablement of the multiple digital channels shall source more AUM in future. Inefficient players would be marginalized and well financed AMC’s like HDFC will be in sweet spot to take over such players.
Invalid Risks: Inventory, Forex and Commodity Price
Disclosure: Not invested. The note is shared for educational purpose only. Please do not use the above as an investment advise due to below reasons:
1. I might be wrong in my understanding of the business, if history really rhymes.
2. Even if I am right, you may not know if I have changed my mind.
3. Resources around you will help to build the conviction.
1 Like
1 Like
Hello Everyone
I made an attempt to calculate the AUM management fee for HDFC AMC by using the below.
- The AAUM for the month of May as published in their website
- The TER details effective June as published in their website
- I have used the TER of direct plans only for calculating the fee (The TER as published in website and deducting approximately 15% from it as it’s inclusive of GST at 18%). I have not used the TER of regular plan as I presume the difference between TER of Regular and Direct plans go to the distributors and doesn’t form a part of AMC fee income as published in quarterly / annual financial results
- Simple formula: (AAUM * TER) /100 for Annual basis. Divide this by 4 for quarterly basis
- Assumed the available monthly AAUM of 4.13 Lakh Crores as the Annual / Quarterly AAUM and the June month TER as constant on an Annual / Quarterly basis. So actuals may vary slightly
This is a very simple calculation. As per the same, the quarterly fee income comes to 550 crores (vs. 500 crores in Q4 FY2021 where the quarterly AAUM was almost the same but could not verify the differences in TER)
Can you please have a look at it and let me know if this a decent way to calculate the fee income and let me know if I miss out something? Also, if anyone can point out the reasons for the difference between the fee income of Q4 actuals and the fee income as per the sheet (excl the TER differences), it would be very helpful.
Thanks
HDFC AMC Fee Income Calculation.xlsx (55.2 KB)
2 Likes
Appreciate the amount time and work you put in 
…
we can not consider direct plan TER as revenue of HDFC AUM …
Please find my view on what constitutes of the revenue for an AMC (HDFC AMU)…
MF , Debt , PMS are the main stream of revenue for HDFC AMC
- MF + Debt
Revenue is sub set of DIRECT PLAN TER
fund TER has- Fund related expenses (trading , customer communication and etc …)
- cut for the AMC which is revenue
- Portfolio management services
- this is not disclosed as part of the non-disclosure agreements with the clients (sovereign fund, university endowment, and institutions)
- this bumpy as the revenue is in 2 parts
||Regular fee – marginal fee
||Performance fee – Large chunk
Note : also the revenue is calculated on daily basis rather then closing AUM of the month / year
above is just my understanding and I could be wrong (please correct )
Each mutual fund has an annual disclosure where it lists a management fee for every scheme. This is the revenue flow to the fund manager ( AMC ). These vary greatly as per the type of scheme so can be a longish exercise but it now very accurate…
1 Like
Looks like HDFC AMC is pushed to no. 3 position as ICICI has moved up. The below numbers are from AMFI website - The Average AUM for the April to June 2021 quarter.
| AMC | Total |
|---|---|
| SBI Mutual Fund | 5,24,316 |
| ICICI Prudential Mutual Fund | 4,29,229 |
| HDFC Mutual Fund | 4,18,947 |
| Aditya Birla Sun Life Mutual Fund | 2,75,904 |
| Kotak Mahindra Mutual Fund | 2,47,750 |
| Nippon India Mutual Fund | 2,42,102 |
| Axis Mutual Fund | 2,08,505 |
| UTI Mutual Fund | 1,87,210 |
| IDFC Mutual Fund | 1,26,268 |
| DSP Mutual Fund | 1,04,026 |
https://www.amfiindia.com/research-information/aum-data/average-aum
2 Likes
HDFC Schemes will do well and biggest branch network after covid will contribute more business, hoping this should change back soon.
Yes but the same applies to SBI & ICICI AMCs as well and in fact SBI has the highest number of branches. I just wonder if this is something to do with how the MF distributors are selling the MF schemes. Post the changes to commissions and other related things that happened in 2019, I see a gradual slowdown in the inflow of funds to HDFC AMC. This could perhaps be due to covid but other companies are able to get higher or similar amount of money (as compared to what HDFC AMC gets) into their funds post initial covid impact.
I believe, and I maybe wrong, this is more due to do it yourself online savvy investors dominant in last 1.5 years…the branch effect or distribution/marketing effect, financial education of uneducated effect has not come into picture since last 1.5 years because of pandemic…and do it yourself look for recent past gains and expected short term gains and hence chose the current best…it can be a virtuous cycle until the underlying stocks of HDFC outperform…
Post covid, the push part of the strategy, which is affecting a larger number in India, than the pull part (do it yourself) would work…and anyone who is better in that would outperform…
1 Like
Yep, that could be one reason. The direct plans contribute 40+% towards overall AUM and 20% towards Equity AUM. Equity AUM is the main item to watch as that brings more revenue.
Does anyone know how much funds did the company raise with the recently concluded new fund offer (Banking & Financial services fund)? The website has the latest AUM (as on last day of the preceding month). It’s not updated for this new fund yet
It was around 1900cr. Company is launching series of NFOs this year.
Thanks. Recently ICICI NFO raised almost 10,000 crores. ICICI AMC is becoming the real competition to HDFC in terms of AUM growth. SBI is leading primarily due to ultra low cost ETF only
1 Like
Result:
Investor Presentation:
New at studying the company. Not invested.
The asset management company’s quarterly average Assets Under Management (QAAUM) was Rs 4,16,900 crore as on 30 June 2021 as against Rs 3,56,200 crore as on 30 June 2020, registering a growth of 17%
Results in-line with expectations (The quarterly AAUM details published already indicated that the revenue growth QoQ will be on the lower side as the overall AAUM remained at 4.16 L crores with a slightly higher portion of equity assets). Going forward, we need to watch the AAUM growth every month to see if they can grow organically. If anyone attended the conference call today, please post the highlights, especially if there were any specifics about growth plans (both organic and inorganic)
There is big increase in other income but no mention of what it was. Does anyone know?