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Informist, Wednesday, Jan. 14, 2026

--HDFC AMC:Aim to neutralise fincl impact of change in expense ratio formula 

--HDFC AMC: Aim to maintain operating margin near the current level

By Meera Nair and Kabir Sharma

MUMBAI – HDFC Asset Management Co. Ltd. aims to keep its operating margin around the current level of 36 basis points, the management of the company said in a post-earnings call with analysts on Wednesday. "As market goes up, there would be impact on the fund level or overall asset class level margins. But the overall operating margins will be able to maintain well with tight leash on cost," Navneet Munot, managing director of the asset manager, said.

HDFC AMC Wednesday reported a 20% on-year growth in net profit for the December quarter to INR 7.70 billion, beating the Street's estimate for the third quarter in a row.

Munot said the other expenses were lower in the December quarter because in the preceding quarter the company has incurred larger expenditure on corporate social responsibility and on certain marketing business promotion. Other expenses of the company were lower by 28% in the reporting quarter compared to the previous quarter. The fund's total expenditure for Oct-Dec was INR 2.19 billion as against INR 1.87 billion a year ago.

The systematic investment plan book of the company has been growing at a steady pace, Munot said. "...I think the momentum in the SIP book has been continuing. Industry has been adding more number of investors, more number of folios, month after month, quarter after quarter. We've been participating very well. And I feel very optimistic on the overall industry growth for next several years," he added. The SIP book of the asset manager stood at INR 2.21 trillion at the end of December.

The company has managed to maintain its operating margin in the 33 to 36 basis point range that reflects discipline, cost management, as well as the operating leverage, the management of the company said. "So we continue to work hard to maintain margins within this band. We recognize that this is easier said than done," Munot added while answering to a query by one of the brokerage firms.

Changes in expense ratio calculation enforced by the Securities and Exchange Board of India are expected to be neutralised, the management said. "Larger schemes definitely are getting impacted and many of the smaller schemes also will increase TER (total expense ratio). At our end, I've said that while the reduced TER means higher alpha and particularly for the larger size funds and there is a long-term positive implication of that. But on the other side, whatever little impact of the reduction on account of exit load or all the exponential construct is there, we will optimise it to ensure that we remain highly focused on our profitability," the fund house said.

The SEBI in December revised the expense ratio limit framework for mutual funds, and renamed it as the base expense ratio. The market regulator approved excluding all statutory levies from the base expense ratio limit. Instead, levies such as securities transaction tax, goods and services tax, stamp duty, SEBI fees, and exchange fees incurred for execution of trades shall be charged on actuals, over and above the permissible brokerage limits.

On the National Stock Exchange, shares of HDFC AMC Wednesday ended nearly 3% higher at INR 2,554.10.  End

Edited by Ashish Shirke

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