AMC business looks like a good secular story, and as mentioned in above posts; an investor should able to compound the capital at decent rate.
Also, the logic as explained by Deven that, HDFC AMC has been loosing market share to SBI due to more population from Tier2/3/4 cities started investing in Mutual funds looks partially correct. Another factor for loss of HDFC market share is that, some of their funds were under performing due to value investing principles adopted by them and now with new management, things may change slowly. Also, EPFO has helped SBI to gain market share.
At the same time, I believe that, MF business can grow much faster if per capita GDP can grow better. It seems that, currently we are lagging behind. 1458 to 2282 over a long period of 10 years is about 4.58% which shows that, the growth is below average or very low compared to the demographic dividend which we have.
If this per capita GDP growth becomes close to 6% (which looks difficult as of today) then it should reach 4100 in 2031 as estimated.
From 4.58% to 6% is substantial improvement, which if achieved, will help AUM to grow as estimated. Also, we should note that, this Per Capita GDP growth was achieved during low inflation decade and Now in next decade inflation could be high. In a way, it may help to achieve more growth in incomes (salaries) leading to higher Per capita GDP growth or it may not since income might be consumed and savings could be low. I may be wrong in my analysis.
Disc : Holding HDFC AMC.
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