HDFC Asset Management Company

HDFC AMC reported revenue of Rs. 411.49 cr Q-o-Q decline of 13.6% from Rs. 476.13 cr in Q4 FY20 mainly on account of market volatility which hit the growth trajectory. EBITDA for the quarter came in at Rs. 316.48 cr with EBITDA margins of 76.9%. The company reported PAT of Rs. 302.36 cr up 21% Q-o-Q basis for the quarter ended June, 2020.

Closing AUM improved 12.0% Q-o-Q to Rs 3,57,500 cr. on account of mark to market gain. AUM split stood at 39:61 equity to non-equity oriented schemes compared to the industry ratio of 38:62 at the end of June, 2020. Market share of closing AUM declined to 14.0% in Q1FY21 from 14.7% in Q1FY20

As ~75% of the company’s profitability depends on the equity-oriented schemes, HDFC AMC will continue on its growth path as normalcy returns when retail investors revert to saving habits post the pandemic. We believe the worst is over for the equity markets and for the Mutual Fund industry with the risk of Covid-19 factored in HDFC AMC’s stock price. At the current valuation of 39.89x TTM earnings, we opine investors to Buy on Dips as the HDFC’s strong brand name, healthy balance sheet and re-looking investment style would all help navigate through the pandemic with ease.