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Yield inches up on avoidance of NFO rush

Result Highlights

* Revenue: Revenue from operations at Rs 3,343mn was up 0.7%/19.9% QoQ/YoY, marginally better than the degrowth/growth of QAAUM at -0.5%/17% QoQ/YoY

* Share of Equity in AUM: Share of Equity in AUM (including Hybrid funds) at 41% was up 200 bps QoQ and 600 bps YoY (calculated on rounded off figures)

* Share of B-30 in AUM: Share of B-30 in AUM at 16% was down 32 bps QoQ and 92 bps YoY

* Channel mix: Share of MFDs, Banks, NDs and Direct was 32%, 10%, 15% and 43%, respectively in overall AUM (Ex-ETF)

* Operating profit margin: Operating profit margin for the quarter, at 71.9%, was up 1151 bps QoQ and 1388 bps YoY

Our view – Yield inches up on avoidance of NFO rush

Operating revenue to AUM (yield) inched up from 43.9 bps to 44.4 bps on sequential basis: This was mainly on account of rising share of equity in AUM, which rose ~200 bps QoQ. Management stated thatthe yield on equity AUM was broadly stable sequentially.

Market share loss in the equity segment is not attributable to fund performance, as per management: The market share in the equity segment stands at 6.65% and pace of market share decline has slowed. The key reason behind market share decline has been not being very active in launching NFOs, as a conscious decision to protect profitability.

There was a one-time benefit to employee cost due to reversal on provision on a discontinued long-term cash incentive scheme: Management has decided to pay ESOP instead of cash as long-term incentive, leading to a one-time benefit of Rs 323mn. We maintain ‘BUY’ rating on ABSL AMC (ABSL) with a revised price target of Rs 755:

We value ABSL at 27x FY23 P/E for an FY21-24E EPS CAGR of 22%.

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