HDFC Asset Management Company Ltd Q4 FY22 Earnings Conference Call Insights

Key highlights from HDFC Asset Management Company Ltd (HDFCAMC) Q4 FY22 Earnings Concall

Q&A Highlights:

• Prayesh Jain from Motilal Oswal asked about the business going ahead with the merger between HDFC Limited and HDFC bank. Navneet Munot MD said the merger will facilitate more efficient cross-selling of banking and financial services products that includes insurance and mutual funds.

• Prayesh Jain from Motilal Oswal asked about the company’s expenses panning out. Navneet Munot MD replied the opex has been around 13 basis point, which has been the trend. The company added that despite business promotion, marketing, NFO and CSR expenses, HDFCAMC has been able to maintain the expenses.

• Rahul Picha from Multi-Act Equity asked that looking at the quarterly average AUM and the closing AUM, there seems to be a material gap in that in 4Q. Navneet Munot MD said that’s on the debt and liquid side. And some of that is seen several times in the last quarter of the year, in the month of March. There could be significant outflows from some of the corporate investors.

• Dipanjan Ghosh from Kotak Securities asked about the share of equity flows that came in through the direct channel. Navneet Munot MD said HDFCAMC don’t give granular details on the flows, but the share between direct and distribution or some of those metrics won’t have changed much.

• Dipanjan Ghosh from Kotak Securities asked also about the unique customer’s market share. Navneet Munot MD replied that unique investors had growth to 33.7 million in March 2022 as against 22.8 million in March 2021. This means the industry has added about 10.9 million new investors. During that period, HDFCAMC has grown from [5.3 million] to 5.8 million.

• Devesh Agarwal from IIFL Capital asked historically what has been HDFCAMC’s experience in terms of lag in getting new flows on the basis of improved fund performance. Navneet Munot MD said it takes a couple of quarters for the world at large to start noticing it. Also depends on the engagement, the product approvals that happen when it comes to channels like banking or the initial distributors. The company added that incrementally in the new outflows, the share should improve over a period of time.

• Devesh Agarwal from IIFL Capital also enquired that over the last three, four months, has the share in the net or gross flows seen an improvement and probably have surpassed the share in the AUM. Navneet Munot MD replied that there are green shoots which are very much visible.

• Devesh Agarwal from IIFL Capital asked about the reason for losing market share in liquid. Navneet Munot MD answered that couple of years back HDFCAMC had 7-8% market share, which jumped to almost 20% in FY20 and FY21. Given the overall environment in the money market, money moves to safe haven. The other aspect would be funding need would have led to redemptions.

• Aditya Jain from Citigroup asked about the movement in other opex of INR57 crore to INR50 crore decline QoQ.  Naozad Sirwalla CFO said it’s largely because of NFO and business promotion being lower in the last quarter.

• Aditya Jain from Citigroup asked about GIFT City subsidiary and what is intended to achieve from it. Navneet Munot MD replied that it would be HDFCAMC’s vehicle to attract more global money into India through the GIFT City. Also over a period of time, there could also been opportunity to mobilize Indian saving through LRS into the global product.