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Result Highlights

? Revenue: Revenue from operations at Rs 2,970mn was down -5.4%/-8.2% QoQ/YoY, as against a sequential QAAUM de-growth of -2.3% QoQ
? Share of Equity in AUM: Share of Equity in AUM (including Hybrid funds) at 42% was down -58 bps QoQ but up 106 bps YoY (calculated on rounded off figures)
? Share of B-30 in AUM: Share of B-30 in AUM at 16.8% was down -20 bps QoQ but up 87 bps YoY
? Channel mix: Share of MFDs, Banks, NDs and Direct was 32%, 9%, 18% and 41%, respectively in overall AUM (Ex-ETF)
? Operating profit margin: Operating profit margin for the quarter, at 53.2%, was down -511 bps QoQ and -735 bps YoY

Our view – Equity segment market share loss continues

There has been market share loss in the equity segment mainly due to lower participation from HNI customers: There have also been outflows in 3 funds viz. the small and midcap fund, the ELSS and large and midcap fund. There have been changes in
the FM responsibilities in these funds and then, the funds have stabilized. However, as per management, it is more of a low participation issue than a redemption issue.

The material rise in expenses on sequential basis was driven by the NFO in the Multi Asset Allocation segment: There were also some infrastructure expenses due to the opening of new branches. There were also some BAU expenses related to travel and marketing that were higher. The total operating expense stood at Rs. 1,390mn, up by 8.9% YoY and 6.2% QoQ.

We maintain ‘ADD’ rating on ABSL with a revised price target of Rs 375: We value ABSL at 16.5x FY24 P/E, at which the stock would trade at an FY24 P/B of 4.3x.

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