HDFC AMC, Aditya Birla Sun Life AMC post contrasting Q2 results but both stocks fall

HDFC Asset Management Company Ltd and rival Aditya Birla Sun Life AMC Ltd reported contrasting quarterly results on Monday, but shares of both mutual fund houses extended losses.

HDFC AMC posted a marginal 1.7% increase in its net profit for the second quarter ended September to Rs 344.38 crore from Rs 338 crore a year earlier. This was, however, lower than the Rs 345.45 crore number registered during the previous three months.

Revenue from operations jumped 19% from a year earlier to Rs 542.33 crore, India’s third-largest fund house by assets under management said.

Second-quarter profit was dragged down mainly by an almost 50% in staff costs to nearly Rs 80 crore.

However, net profit for the first six months of the current financial year was 7.8% higher from a year earlier while the top line was 14.6% higher.

Still, the tepid quarterly earnings disappointed investors. Shares of HDFC AMC fell 0.5% to close at Rs 2,768 apiece. The shares have lost almost 18% since touching a one-year high in early September.

Aditya Birla Sun Life AMC Q2

The company, a joint venture of Aditya Birla Group and Sun Life Financial Inc of Canada, reported a 38% jump in profit to Rs 173.1 crore for the July-September quarter from Rs 125.4 crore in the year-ago period.

Total revenue rose 28% to Rs 372.2 crore in the period under review from Rs 291 crore in the quarter ended September 30, 2020.

This is the first time the company is declaring quarterly results as it went public only earlier this month. The IPO was a complete offer for sale by Aditya Birla Capital and Sun Life. The total IPO size was Rs 2,768.25 crore. It was subscribed 5.25 times.

Shares of the company fell 1% on Monday to close at Rs 651.75 apiece. The shares are now down 8.5% from their initial public offering price of Rs 712 apiece.

Aditya Birla Sun Life AMC is India’s fourth-largest fund house with an AUM of Rs 2.75 trillion at the end of June 2021. In addition, it also had Rs 450 crore in assets under domestic fund of funds, according to the Association of Mutual Funds in India. HDFC AMC is ranked third with an AUM of Rs 4.2 trillion.

Future plans

HDFC AMC seems to be going long on the passive fund segment. Earlier this month, it filed papers with the Securities and Exchange Board of India to launch nine passive funds including exchange-traded funds.

Passive funds have been gaining favour among investors, who are looking for low-cost options, as most active funds have failed to comprehensively beat benchmark indices in the last few years.

Aditya Birla Sun Life AMC managing director and CEO A Balasubramanian said the company is focusing on increasing its overall assets under management by growing across different asset categories.

“Our sustained growth in SIP (systematic investment plan) book, equity AUM, B-30 assets, folio count and differentiated product offerings have contributed towards our growth,” he said.