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Net equity inflows start to improve somewhat

Our view – Sequential yield improvement may be transient

Net equity inflows start to improve on the back of improved fund performance: Net Sales have been positive in November and December and for the quarter as a whole. Sales for the quarter includes Rs 8.9bn raised for the Transport and Logistics Fund. Relatively speaking, Sales in December was lower (weaker) than the industry but there has been some pickup in January. The flows are backed by improved performance and the trend is expected to continue.

Calculated overall revenue yield has inched up 1 bp QoQ but management continues to flag the usual expected erosion: Blended revenue yield will continue to decline going forward on the back of AUM rise (telescopic pricing formula) and replacement of old assets with new. The blended yield will decline about a couple of bps every year for the next 3 years.

We maintain ‘NEUTRAL’ rating on ABSL with a revised price target of Rs 525: We value ABSL at 19.8x FY25 P/E, at which the stock would trade at an FY25 P/B of 4.5x.

Result Highlights (See “Our View” above for elaboration and insight)

* Revenue: Revenue from operations at Rs 3,415mn was up 1.9%/8.7% QoQ/YoY, leading/lagging QAAUM growth of 0.2%/10.6% QoQ/YoY.

* Share of Equity in AUM: Share of Equity in AUM (including Hybrid funds) at 43.7% was up 178 bps QoQ and 103 bps YoY (calculated on rounded off figures)

* Share of B-30 in AUM: Share of B-30 in AUM at 17.5% was up 20bps QoQ and 50bps YoY

* Channel mix: Share of MFDs, Banks, NDs and Direct was 33%, 9%, 17% and 41%, respectively in overall AUM (Ex-ETF)

* Operating profit margin: Operating profit margin for the quarter, at 56.9%, was down -40 bps QoQ and -142 bps YoY

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