Earnings Outlook
HDFC AMC Jul-Sept PAT seen up 34% YoY on rise in AUM
This story was originally published at 21:43 IST on 11 October 2024
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By Ashna Mariam George
MUMBAI – HDFC Asset Management Co. Ltd.'s net profit for the September quarter is expected to rise 34.3% on year to INR 5.88 billion, the average of estimates by four brokerages showed. Analysts see the rise in equity assets under management boosting profit and revenue growth for the fund house. However, sequentially, the net profit is estimated to fall 2.7%.
The brokerages’ estimates for the company's net profit are in the range of INR 5.51 billion-INR 6.39 billion. The company's Jul-Sept quarter earnings are scheduled to be announced Tuesday. On Friday, the company's shares ended 0.9% higher at INR 4,449.40 on the National Stock Exchange.
The revenue of HDFC Asset Management Co. for Jul-Sept is expected to grow over 35% year-on-year to INR 8.71 billion, according to the average of estimates from the brokerages. Sequentially, the revenue is expected to rise 12.3%. At the lower end, the revenue is seen at INR 8.63 billion. At the higher end, it is seen at INR 8.76 billion.
Prabhudas Lilladher Institutional Equities expects the higher tax rate structure introduced in the Budget for the financial year 2024-25 (Apr-Mar) to weigh on the company's core profit after tax. In the Budget, the long-term capital gains tax was revised to 12.5% from 10?rlier, and the short-term capital gains tax was increased to 20%, from 15%. For the June quarter, the company had reported a tax outgo of INR 1.48 billion.
The assets under management of the fund house are expected to rise by 12-14% on a sequential basis mainly because of strong equity performance and higher equity market share, the brokerages said. As of Jun. 30, the company's quarterly average assets under management were INR 6.71 trillion. The market share of the asset management company had inched up to 11.4% in the previous quarter.
Nuvama Wealth Management Ltd. expects a strong 66.2% year-on-year growth in equity assets under management to drive improvement in the company's share of equity mix to 66.4%. "This in turn is expected to drive strong revenue growth," the brokerage said in its earnings preview, adding that higher operating leverage would drive growth in core earnings growth.
The broking firms said the stability of retail flows, the management's outlook on market share, and bond yields should be the focus areas for the fund house’s earnings.
Following are the Jul-Sept earnings estimates, in INR million, for HDFC Asset Management Co. based on reports from four brokerages:
| Brokerage |
Net sales |
Net Profit |
| Kotak Institutional Equities | 8,722.0 | 5,514.0 |
| Nuvama Wealth Management Ltd | 8,761.0 | 6,394.0 |
| Prabhudas Lilladher Pvt Ltd | 8,631.0 | 5,644.0 |
| YES Securities (India) Ltd | 8,706.0 | 5,951.0 |
| Average | 8,705.0 | 5,875.75 |
End
Edited by Rajeev Pai
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