Asset management firms attract buying interest

Our Bureau Mumbai | Updated on May 11, 2021

Outlook for AMC business brightens as market expands

Shares of listed three listed asset management companies have been attracting buying interest from investors. These shares have risen sharply in the last one year, as analysts expect better future for the sector as the market is expanding. Reflecting this, these firms have come out with a stellar performance for fourth quarter of financial year ended March 31.

Shares of Nippon AMC gained 46 per cent in the last one year while UTI AMC gained almost 50 per cent since its listing in October 2020.

HDFC AMC marker share dips

However, shares of HDFC Asset Management Company was relatively fared poor, as the stock gained only 10 per cent during the last one year.

HDFC Asset Management Company reported 27 per cent increase in March quarter profit to ₹310 crore while revenue from operations jumped six per cent to ₹500 crore. Investment and management fee in FY’21 declined to ₹1,821 crore (₹1,965 crore) while PMS and advisory fees was down at ₹36 crore (₹38 crore).

Other income at ₹43 crore was lower than historical average on muted equity markets and increase in Gsec yields during the quarter.

The fund house has lost market share in the March quarter as most investors preferred thematic and passive funds where HDFC AMC does not have strong presence.

While HDFC MF dividend yield NFO has received good response, it is set to launch thematic, passive funds and international funds in near future, said PhillipCapital.

UTI AMC turns around

UTI Asset Management Company reported net profit of ₹134 crore in the March quarter against net loss of ₹28 crore as revenue increased to 29 per cent to ₹236 crore (₹182 crore).

UTI has managed to capture 6 per cent of net industry inflows and saw revival in income category scheme with inflows of ₹1,200 crore despite industry witnessing outflows of ₹14,100 crore in FY21, said Centrum Institutional Research.

As per new Provident Fund Regulatory and Development Authority norms managers of provident fund have to charge higher yields from this fiscal. This could benefit UTI Retirement Solution, a wholly owned subsidiary formed to manage provident fund money and push up its yield from one basis point to five bps. The move will enhance consolidated annual revenue by six per cent. UTI RSL has asset under management of ₹1.66 lakh crore.


Nippon Life AMC

Nippon Life India Asset Management has recorded multi-fold increase in net profit at ₹167 crore in March quarter against ₹4 crore logged in the same period last year. Revenue from operations was up at ₹302 crore (₹274 crore).

The Mutual Fund AUM was up 14 per cent at ₹2.29 lakh crore.


Debt biz sees inflows

The debt business saw strong inflows from the institutional segment, which helped it to sustain high growth for the second consecutive quarter, said RaghavGarg, Research Analyst, Normal Bang.

Going forward, the management expects to improve its equity performance. It also aims to improve revenue from alternative investment fund and portfolio management services by leveraging Nippon Life’s global network.

Overall, analysts expect the sector to do well, given the long-term positive outlook for equity markets and growing potential investors’ population.

Published on May 11, 2021

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