HDFC Asset Management

Company Limited
Company Presentation
Q1 FY19

1
 Industry – Quick Overview

Assets Under Management (AUM) Net Flows

37% 43% 42%
Equity Debt Liquid Others

Net Inflows (Rs. bn)

21.4 22.9
2,608
19.0 0.8
0.9

0.6 3.4 4.6

3.4
(Rs. trn)

8.0 7.7 1,219

8.0
506 404
9.2 9.6 227 188 220 112
7.0 21

Jun-17 Mar-18 Jun-18 (88) (29)

(395)
Equity Debt Liquid Other
Equity as a % of Total FY18 Q1FY18 Q1FY19
Jun-18 Arbitrage AUM: Rs 0.6 trn Q1FY19 Arbitrage net flows: Rs 5 bn

Individual MAAUM SIP Flows B-30 MAAUM

57.9 70.9 74.2 14%

(SIP contribution in Rs bn)

MAAUM in Rs. bn
(MAAUM Rs. trn)

11.0 11.3
10.4 (49%) (48%)
(52%) 71 76 20,248
47
9.5 11.7 12.3 31
(48%) (51%) (52%) 3,322

Jun-17 Mar-18 Jun-18 Apr-16 Jun-17 Mar-18 Jun-18 Jun-18

Individual Investors Institutional Investors T-30 B-30
Individual Folios (mm)
____________________ Share of B-30 MAAUM 2
Source: AMFI ; Equity refers to equity-oriented funds; Others include Gold ETFs, other ETFs and FOF (excluding domestic FOF)
HDFC AMC at a glance

50% Equity-Oriented
Assets
Assets Under
Management(1)
50% Non-Equity Oriented
Assets

₹1,510 bn ₹1,501 bn
₹3,011 bn
US$23.2bn US$23.1bn
US$46.3bn

₹1,910 bn 8.4 mm
Individual MAAUM(1) Live Accounts(1)

210 Branches(1)(2);
1,100
65K+ Empaneled Employees(1)
Distribution Partners ₹69.2 mm
PMS & SMA AUM(1) (3)

____________________
(1) As of June 30, 2018 / for June 2018; (2) Includes one representative office in Dubai; (3) includes advisory mandates
Source: Internal 3
 Total AUM and Market Share

Total AUM(1) #2 Market Share in Total QAAUM(2)

₹ billion
Jun-2018
HDFC MF,
YoY 22% 13.1%

2,920 3,011
2,478
2,306 Mar-2018 Jun-2017
HDFC HDFC
MF, MF,
1,656
1,506 13.0% 13.0%

Mar-15 Mar-16 Mar-17 Jun-17 Mar-18 Jun-18

Total AUM as of July 2018 was ₹ 2,950 billion
____________________
(1) Source: Internal
(2) Source: AMFI 4
 Actively Managed Equity-oriented AUM and
Market Share

#1 Market Share in Actively Managed Equity-oriented

Actively Managed Equity-oriented AUM(1) QAAUM(2)
₹ billion HDFC MF
Jun-2018 16.4%

YoY 33%

1,449 1465

1,098
957
Mar-2018 Jun-2017
675 629 HDFC MF HDFC MF
16.9% 16.5%

Mar-15 Mar-16 Mar-17 Jun-17 Mar-18 Jun-18

Total Active Equity AUM as of July 2018 was ₹ 1,538 billion

____________________
(1) Source: Internal
(2) Source: AMFI
Actively managed equity-oriented AUM/QAAUM excludes index and arbitrage funds from equity-oriented funds 5
 AUM by Segment – HDFC AMC and Industry

HDFC AMC MF AUM by Segment (1) Industry AUM by Segment(2)

Jun-2018 Others Jun-2018

Liquid Others
0.2%
15.5% 4.0%
Liquid
20.0%

Equity
42.0%
Equity
50.2%

Debt
34.1%
Debt
34.0%

Mar-2018 Jun-2017 Mar-2018 Jun-2017

Others Others
Others Others
Liquid 3.7% 2.9%
0.3% Liquid 0.3%
12.3% 12.4% Liquid Liquid
15.7% 18.2% Equity
Equity 37.0%
Equity
43.2%
Equity 46.2%
51.3%
Debt
36.1% Debt
41.1%
Debt
37.4% Debt
41.9%
____________________
(1) Source: Internal
(2) Source: AMFI 6
 Focus on Individual Customers

Number of Live Individual Accounts (in 000s) (1) Individual MAAUM % of Total(1)

YoY 29%
1,513 1,863 1,910

YoY 26%

8,045 8,360
58.6% 62.2% 62.4%
6,479 52.0%

Jun-17 Mar-18 Jun-18 Jun-17 Mar-18 Jun-18 Industry

(Jun-18)(2)
Individual MAAUM (₹ bn)

Individual customer prefer equity-oriented schemes and stay invested for longer periods
____________________
(1) Source: Internal
(2) Source: AMFI 7
 Most Preferred Choice of Individual Investors

Individual Assets Market Share (Jun-18) Individual Assets Market Share (Mar-18) Individual Assets Market Share (Jun-17)

15.4% 15.7% 15.9%

14.3% 14.6% 14.6%

9.9% 9.4% 9.9% 9.6% 10.0% 10.0%

8.8% 8.6% 7.6%

HDFC ICICI Pru ABSL Reliance SBI HDFC ICICI Pru ABSL Reliance SBI HDFC ICICI Pru Reliance ABSL SBI
MF MF MF MF MF MF MF MF MF MF MF MF MF MF MF

Source: AMFI , based on monthly average AUM

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 Systematic Transactions

…With Quality Long-term Inflows Through Systematic Transactions

Strong Growth in Systematic Transactions (Rs mm) Long Tenure SIP Book(1)

2.31 3.16 3.36

77.3%
64.6%

11,531 11,644 Over 5 Years Over 10 Years

8,272

Strong and growing

“Order Book” to
Jun-17 Mar-18 Jun-18 provide predictable
flows
#mm systematic transactions
____________________
Source: Internal
(1) Based on tenure at the time of registration of all live SIPs during Jun-18
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 Multi-channel Distribution Network

Well Diversified Distribution Channel

Total AUM (Jun-18) Equity-oriented AUM (Jun-18)

HDFC Bank 9.1% HDFC Bank

Direct, 11.7%
Banks, 15.7%
Direct 17.3% Banks, 18.5%
35.8%

IFAs
27.5%
National Distributors National Distributors, IFAs, 39.7%
20.9% 24.5%

Mar-2018 HDFC Bank 10.3%

Jun-2017 HDFC Bank 8.5% Mar-2018 HDFC Bank 12.1%
Jun-2017 HDFC Bank 11.5%
Direct,
Banks, 17.3% Banks, 16.6% Direct,
Direct Direct, 17.5% Banks, 19.1% 17.0% Banks, 18.7%
34.1% 32.9%

IFAs IFAs, 27.4% National Distributors,

National Distributors 27.6% National Distributors, 24.2% IFAs, 39.2% National Distributors,
21.0% 23.1% 24.4% IFAs, 39.9%

Source: Internal 10
 Geographic Spread

Total MAAUM by T30 and B30 cities(1) #2 Player in B-30 Markets(1)

B 30, SBI MF,

13.0% 17.0%
Others,
36.7% HDFC
MF,
12.0%

ICICI Pru
MF, 11.2%
UTI MF,
11.4% Reliance MF,
T 30,
11.8%
87.0%

Network of 210 branches with 134 in B-30 cities(2)

c.65,000 empaneled distribution partners

____________________
(1) Source: AMFI, based on monthly average AUM for June 2018
(2) As of June 30, 2018. Includes one representative office in Dubai; 11
 Strong Digital Presence

Supported by Integrated Online Platform

Electronic and Physical Transaction as % of Total Transactions

38.5%
49.2% 53.6%
69.9%
Digitization Across
Functions
61.5%
50.8% 46.4%
30.1%

FY15 FY18 Q1FY18 Q1FY19

Electronic Physical

Strong online presence - dedicated separate digital platforms distribution partners and customers
FY15-18 CAGR of 46.2% for electronic transactions
16.8% transaction are through HDFC MFOnline and mobile application

Source: Internal 12
Financials

13
 Ind AS Transition

▪ Adoption of Indian Accounting Standards (Ind AS) with effect from 1 st April 2018.
▪ Results of Q1FY19 are prepared as per Ind AS requirements.
▪ Accordingly figures for Q1FY18 have been restated.

Key Changes Remarks

Investments Investments are fair valued through P/L except certain
debt instruments which are valued at amortised cost.
Employee Stock Option Obligations under outstanding & unvested ESOS have to be fair valued
Schemes (ESOS) and amortised as part of employee benefit expenses over the period of
vesting.
Others Interest free refundable security deposits are required to be measured
at present value using an appropriate discount rate.
Deferred Tax adjustments on GAAP differences (where required).

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PAT Reconciliation-
Previous GAAP Vs Ind AS – Q1 FY 18

(Rs. In Millions)
Particulars 30-Jun-17
Net profit after tax as reported under Previous GAAP 1,432

Adjustment increasing / (decreasing) net profit after tax as reported

under Previous GAAP (net of tax):
Fair value change in investments 213
Fair valuation of employee stock options (4)
Others 2
Actuarial (gain) / loss on employee defined benefit plan recognised in
'Other Comprehensive Income' 3

Net Profit after tax as per Ind AS 1,646

Other Comprehensive Income (3)

Total Comprehensive Income (net of tax) as per Ind AS 1,643

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 Equity Reconciliation -
Transition from Previous GAAP to Ind AS

(Rs. In Millions)
Equity (Shareholders' Fund) Reconciliation - Previous GAAP As on
Vs Ind AS 01-Apr-2017
Equity as per Previous GAAP 14,229

Adjustments:

Fair value change in investments 1,025

Others (1)
Deferred Tax adjustments on above (79)

Equity (Shareholders' Fund) as per Ind AS 15,174

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Financials Summary – Quarterly Earnings

(Rs. In Millions)
Particulars Q1 FY19 Q1 FY18 Change
Revenue from Operations 4,712 3,904 21%
Expenses
Employee Benefit Expenses 538 429 25%
Depreciation and Amortization Expenses 26 22 18%
Business Development and Other Expenses 1,501 1,400 7%
Total Expenses 2,065 1,851 12%
Operating Profit from core AM business 2,647 2,053 29%
Other Income 299 266 13%
Profit before tax 2,946 2,319 27%
Tax Expenses 894 673 33%
Net Profit for the Period 2,052 1,646 25%
Other Comprehensive Income (Net of Tax) (1) (3) -71%
Total Comprehensive Income 2,051 1,643 25%
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 Operating Profit Margin

Operating Revenue Operating Expenses PBT&OI (bps of AAUM)

63 65 64
61 62
53

29 27 29 33
44
34

32 35 34 31
21 19

Q1FY18 Q1FY19 HDFC AMC Reliance AMC ICICI Pru AMC ABSL
AMC

FY18 as per previous GAAP

Q1FY18 as per Ind AS
Q1FY19 as per Ind AS FY18

____________________
Based on internal computations 18
 Profitable…

FY17 Profit after tax (Rs bn) FY18 Profit after tax (Rs bn)

5.50 7.22
4.81 6.26
4.05
5.05

3.31 3.22
2.24 2.21

FY17 ICICI Pru Reliance SBI ABSL FY18 ICICI Pru Reliance SBI ABSL
AMC AMC AMC AMC AMC AMC AMC AMC

Most profitable asset management company in India in terms of net profits since FY14
____________________
Source: Annual reports, AMFI, CRISIL Research
Note- The above is as per previous GAAP. 19
 Financials Summary – Historical Trends
Figures In Rs Million
Revenue from Operations Operating Profit

17,598 9,550
14,800
12,260 6,919
9,527 5,459 5,487

FY15 FY16 FY17 FY18 FY15 FY16 FY17 FY18

Profit before tax Profit after tax

10,625 7,216
7,998 5,502
5,877 6,005 3,925 4,074

FY15 FY16 FY17 FY18 FY15 FY16 FY17 FY18

Note-The above is (Excluding REP Performance Fee). The preparation is as per previous GAAP. 20
 ROE and Dividend Payout Ratio

40% + Return on Equity(1)

FY15 FY16 FY17 FY18

41.1% 42.1% 42.8% 40.3%

40%
40% + return on average net worth every year since FY15

Consistently improving Dividend Payout Ratio(2)

____________________
(1) Calculated as Profit After Tax divided by average Net Worth
(2) Including dividend distribution tax 21
Thank You

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Disclaimer

This presentation is for information purposes only and does not constitute an offer or invitation to sell or the recommendation or solicitation of an offer or
invitation to purchase any securities (“Securities”) of HDFC Asset Management Company Limited (the “Company”) in India, the United States, Canada, the
People’s Republic of China, Japan or any other jurisdiction. This document has not been and will not be reviewed or approved by a regulatory authority in India or
by any stock exchange in India.
The Information contained in this presentation is only current as of its date and has not been independently verified. The Company may alter, modify or otherwise
change in any manner the contents of this presentation, without obligation to notify any person of such revision or changes. Past performance may or may not be
sustained in future and should not be considered as, indicative of future results. The presentation may contain information about HDFC Mutual which has to be
read and understood in the context of the Company’s business, its operations and performance, and should not be construed as any form of
communication/advertisement of HDFC Mutual Fund.
This presentation may contain, words or phrases like will”, “aim” “believe”, “expect”, “will continue”, “anticipate”, “estimate” and similar expressions or
variations of these expressions, that are “forward-looking statements that involve risks and uncertainties and are based on certain beliefs, plans and expectations
of the Company. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a
number of risks, uncertainties and assumptions. Although the Company believes that such forward-looking statements are based on reasonable assumptions, it
can give no assurance that such expectations will be met. Representative examples of factors that could affect the accuracy of forward-looking statements include
(without limitation) the condition of, and changes in, India’s political and economic status, government policies, applicable laws, global capital markets, the
mutual fund industry in India, and international and domestic events having a bearing on the Company’s business, and such other factors beyond the Company’s
control. You are cautioned not to place undue reliance on these forward-looking statements, which are based on current views of the Company’s management on
future events. Further, nothing in this presentation should be construed as constituting legal, business, tax or financial advice or a recommendation regarding the
securities. None of the Company or any of its affiliates, advisers or representatives accepts any liability whatsoever for any loss howsoever arising from any
information presented or contained in this presentation. Before acting on any information you should consider the appropriateness of the information having
regard to these matters, and in particular, you should seek independent financial advice.

Definitions
AUM refers to Assets Under Management as on end of any given month/period
MAAUM refers to a given month’s average Assets Under Management
QAAUM refers to a given quarter’s average Assets Under Management
AAAUM refers to a given year’s average Assets Under Management
Unless otherwise stated, the above definitions are used for Mutual Fund Assets under management.

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