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Our view – One-off adjustment negatively impacts revenue yield

Revenue yield evolved more negatively than usual on sequential basis due to a one-off adjustment: There was an under-estimation of commission on overall basis and hence, the expense ratio was adjusted for some schemes. Then, on 1st April, the TER was reinstated to a significant extent. The prevailing segmental yieldS as on 1st April imply overall blended yield will be back to 47 bps in 1Q compared with 45-46 bps in 4Q

The company will do everything in its hands to capitalize on the opportunity of having HDFC Bank as its parent: HDFC AMC has appointed a dedicated resource for this purpose. The flow market share of the company on the HDFC Bank platform is much higher than the book market share. The book share on HDFC Bank platform is 25-30% but the flow share is much more.

We maintain ‘NEUTRAL’ rating on HDFCAMC with an unchanged price target of Rs 4000: We value HDFCAMC at 38x FY26 P/E, with the implied P/B being 10.3x

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

* Revenue: Revenue from operations at Rs 6,954mn was up 3.6%/28.6% QoQ/YoY, compared with growth in QAAUM of 11.1%/36.3% QoQ/YoY

* Share of Equity in AUM: Share of Equity in AUM (including Hybrid funds) at 63.0% was up 240 bps QoQ and 860 bps YoY

* Share of B-30 in AUM: Share of B-30 in AUM at 19.1% was up 30 bps QoQ and 130 bps YoY

* Channel mix: Share of Banks, MFDs, NDs and Direct channel was 13.1%, 37.0%, 24.9% and 25%, respectively in Equity QAAUM

* Operating profit margin: Operating profit margin for the quarter, at 77.5%, was up 136 bps QoQ and 165 bps YoY

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