They have huge cash which is earning them “other income”…so by 2027 that other income may not be there…pls note that operating and net margins cannot be the same…IF at all they have no interest expense and depreciation as well as no other income, they still need to pay tax…so PAT margin will not be equal to Operating Margin.

Hi Pragnesh, could you please share your analysis about Kaka industrires ?

Ratios of this company is better than Shankara buildpro.(Debtor days, receivables etc)

“Bank-backed AMCs have seen an incredible recovery in their equity market shares. This is when there has been a large increase in new MFs and PMSes. Big getting bigger?” – Harsh

https://x.com/theHarshFolio/status/1813100502592418083

HDFC AMC concall Q1 FY25: 15 July 2024, Monday

Q1 FY 25 HDFC AMC PPT.pdf (1.8 MB)

Q1 FY 25 HDFC AMC Results.pdf (2.0 MB)

General comments from management

Industry continues its upward journey, experienced a 7-fold increase in AUM in the last 10 years. Industry at INR 8 trillion in 2014, but now industry has added 10 trillion in last 6 months itself. Monthly SIPs continue upward trend. HDFC AMC has surpassed INR 7 trillion in AUM.

Explanations on employee benefit variable expenses

This was a function of headcount (280 employees added), annual increments, 1 big employee engagement event, training and development. Management suggested that it is better to look at it on annual basis.

Other expenses: NFO, KYC related expenses.

Branch expansion and NFO plans

24 new branches were added in 1st week of January 2024 after a long time. No plans to add any branches in coming weeks and months. The 24 new branches added were based on AUM of areas, these are relatively low cost (in terms of rents/lease) and are 2-3 people branches in B30 cities. Management keeping in mind presence of HDFC bank branches.

No new NFOs planned. Management believes that the current product bouquet is complete, don’t see new offering anytime soon. Total 100 products available including active and passive. Added 57 products over last 3 years.

Next phase of growth and investment for HDFC AMC

Employee addition: creating a dedicated channel for HDFC bank, most of the 280 new employees are hired in the core sales and client services roles. Need few more employees in the technology and digital team.

Non-core offering: focus also on building the non-traditional MF business, looking to build an alternative offering. 5 employees already onboarded in the alternatives space; this is still at an early stage.

Partnership with HDFC bank: management recognises that this is a very large opportunity. Some very senior level employees have been assigned to take forward this partnership.

Client service to client delight: large benchmarking exercise was conducted to improve on all fronts like turnaround times, digital offering etc. Also, management sees an opportunity to be number 1 in many mutual fund categories.

Yield details

Equity: 59 bps, Debt: 28 bps, Liquid: 12-13 bps

Percentage of pure equity AUM went from 39% to 50% (64% all equity-oriented assets). Mark to market gain has pushed equity higher and SIP flows (bulk into equity). Management made its intention to grow all segments clear, and not just equity.