HDFC Asset Management Company Ltd (HDFCAMC) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day, and welcome to the Q2 FY27 earnings conference call of HDFC Asset Management Company Limited. From the management team, we have with us, Mr. Navneet Munot, Mr. Naozad Sirwalla, and Mr. Simal Kanuga. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Simal Kanuga. Thank you, and over to you, Simal.
Simal Kanuga (HDFC Asset Management Company Ltd): Thanks. Good evening, everyone, and thank you for joining us. Let me begin with a quick overview of the industry. The quarter began positively with Nifty 50 gaining about 2% in July, followed by a modest decline in August and a sharper 6% correction in September. Overall, market ended the quarter down around 5%. Equity-oriented funds attracted net inflows of Rs. 1,161 billion during the quarter. September marked the 67th consecutive month of positive equity flows, a remarkable streak dating back to March of 2021. SIPs continued their steady growth with monthly contributions reaching a new high of Rs. 325 billion in September, compared with Rs. 294 billion a year ago and Rs. 318 billion in June of 2026. During this quarter, contributing SIP accounts crossed 100 million mark, and over the last decade, monthly SIP contributions have multiplied almost 10 times. On fixed income, debt mutual funds recorded net outflows of Rs. 607 billion, while liquid funds saw net inflows of Rs. 457 billion. ETFs attracted Rs. 367 billion. Arbitrage funds garnered inflows of Rs. 63 billion during the quarter. Turning to our performance, our quarterly average AUM stood at Rs. 9.69 trillion, up 10% year-on-year and 4% sequentially.
Simal Kanuga (HDFC Asset Management Company Ltd): Equity-oriented assets stood at ₹6.51 trillion representing 67.1% of our AUM compared with 57.5% for the industry. Within this, actively managed equity AUM grew by 14% year-on-year to ₹6.08 trillion with a market share of 12.7%. On fixed income, net AUM stood at ₹1.62 trillion with a 13% market share, while liquid AUM grew 10% year-on-year to ₹860 billion. Our live individual accounts increased to 32 million from 26 million a year ago. Our unique investor base stood at 17.7 million representing a penetration of 28%. In other words, 28 out of every 100 mutual fund investors in India invest with us. Over last one year, we have added 3.2 million unique investors while the industry has added 6.3 million. Our systematic flows comprising of SIPs and STPs, that's systematic transfer plans, stood at ₹48 billion in September, up 6% year-on-year across 19 million transactions. During the quarter, we also launched two new AIFs, a Category II equity fund focused on private markets. We are anticipating first close in this quarter and also launched a Category III fund investing in listed securities which achieved first close during the last quarter. We have started managing EPFO fixed income mandate during the quarter that went by. With that, I now move to financials. Revenue from operations for the quarter was ₹11.7 billion, up 14% year-on-year. Operating profit was ₹9.1 billion, up 16% with an operating margin of 36 basis points of AUM. Profit before tax stood at ₹9.8 billion, up 12%. Also, please note that the reported PAT is not directly comparable year-on-year as the September 2025 quarter benefited from ₹468 million reversal of income tax provision, which resulted in additional credit to the tax account and the PAT. So, that's where I would put a pause. Thank you very much. We can now open it up for questions. Navneet, Naozad and I are happy to take them. Thank you.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. First question is from the line of Devesh Agarwal from IIFL Capital. Please go ahead.
Devesh Agarwal (IIFL Capital): Good evening everyone and thank you for the opportunity. Sir, my first question is on blended yield. We see a sequential improvement in the yields. So, just wanted to understand what are the drivers for this and also if you can share the asset wise yield.
Naozad Sirwalla (HDFC Asset Management Company Ltd): So, hi Devesh. I'll share the yields for the quarter. So, for active equity, our yields was 61 basis points. For overall equity funds, this was 58 basis points. Debt is around 28-29 basis points and liquid, 13 basis points.
Devesh Agarwal (IIFL Capital): And what has led to this improvement on a sequential basis? Is it only the asset mix change or something else as well?
Naozad Sirwalla (HDFC Asset Management Company Ltd): So, largely asset mix change. It's not like a material movement. It's slightly upwards from previous quarter.
Devesh Agarwal (IIFL Capital): Okay. And, sir, on the alternate business, we see an increase. I understand a large part of that is the debt mandate that we have won. But two things I would want to know. What is the revenues that we are targeting in this and the pipeline on the alternate? So, by when we can reach 100 crore of revenues from the alternate business and what is the pipeline going forward?
Navneet Munot (HDFC Asset Management Company Ltd): Devesh, Devesh, we don't give guidance like this when will we reach a certain amount. All I can say is that, beyond mutual funds, now the alternative platform is working as a full stack. So, this quarter we launched two new funds on alternative side. First is the HDFC AMC Select Opportunities Fund. This is a Category II fund investing in late stage venture and early stage growth companies.
Navneet Munot (HDFC Asset Management Company Ltd): In the process of raising money have seen a very good, encouraging reception from some of the global institutions as well as domestic institutional investors, family offices, and HNIs. Second is the HDFC AMC Emerging Opportunities Fund. This is our first Category III fund and it has also seen a strong traction and fund raising continues. On the PMS side, you rightly said that a large part of the AUM is on account of the EPFO mandate, which has gone live. And together with SPFO, it mandate, it shows the depth of our fixed income capability. So, idea is like building a one-stop platform where an investor can stay with HDFC AMC for every need, across mutual fund, PMS, AIF, etc. On the margins, question, AIF is a margin accretive business, so fees here sit above what we earn on our mutual fund equity book in the range of 80 to 90 basis points, depending on the product. Discretionary PMS earns broadly what our equity mutual fund business does. Non-discretionary PMS is a is a strategic play, and government mandates like EPFO and SPFO, they are highly contested. And the pricing reflects that. So, we run them for the institutional credibility and capability they build. But those mandates open doors well beyond these mandates. So, these are like highly prestigious, but on all the other part of alternative and PMS, they would be margin accretive.
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