Asset Management Companies (AMCs) demonstrated improved business metrics in the first quarter ended June 2023 (Q1FY24), but a sharp run-up in stocks leaves little room for further upside in the immediate term, say analysts. During this quarter, HDFC AMC reported a 10 per cent year-on-year (YoY) rise in revenue from operations at Rs 575 crore. Nippon India's revenue from operations went up 12 per cent to Rs 354 crore.
The 2023-24 (FY24) July-September quarter (second quarter, or Q2) proved to be a mixed period for asset management companies (AMCs). While the two largest listed AMCs, HDFC and Nippon, reported robust growth in both revenue and profits, the other two, Aditya Birla Sun Life and UTI, experienced profit declines. HDFC AMC reported an 18 per cent year-on-year increase in Q2 revenue to Rs 765 crore, while Nippon's revenue rose 15 per cent to Rs 475 crore.
By contrast, the fraud enabled Raju's kin and aides to make hundreds of crores, charges CBI.
Given gains in equity prices, it is not surprising that the earnings of asset management companies (AMCs) are growing quicker. The earnings momentum looks set to continue. Good fund performances have thus led to AMC earnings upgrades although valuations are high. Recent market performance and net flow trends have led to earnings upgrades by between 3-8 per cent for FY25-27.
The financial numbers for 2023-24 (FY24) of the four pure-play listed asset management companies (AMCs) have enthused the Street. All firms listed robust growth in net profit and revenue both during the January-March quarter (Q4) of FY24, as well as in full FY24. The strong performance comes amid a positive growth environment for the sector, led by tailwinds such as sharp growth in assets under management (AUM) and robust performance in equity offerings.
Mutual funds have launched a clutch of new fund offers in the silver ETF (exchange traded fund) category this year and collected Rs 1,400 crore in assets after the introduction of the newly-created investment asset class by market regulator Sebi in 2021. Further, fund houses including Kotak Asset Management Company have filed draft documents with the markets regulator to float silver ETF as well as silver ETF fund of funds for investors, information with the Securities and Exchange Board of India (Sebi) showed. These NFOs (new fund offers) are providing an opportunity to the investors to digitally invest and own silver which is easily tradable during market hours.
Analysts believe that investors should look at stocks that hit 52-week lows only if they have a dividend paying track record, are debt-free and have sound fundamentals.
There was no smooth surge in middle class prosperity for foreign businesses to tap into because of the Indian economy was mismanaged, argues Debashis Basu.
'The deal pipeline across products is robust for 2024.'
Industry players say they have learnt from the bitter experience of 2008 and have far better checks and balances in place to avoid an encore.
The fall in the equity markets was to put some pressure on the balance sheets of the top five asset management companies (AMCs) in the country. But, two of them have managed to buck the trend, thanks to the rise in their average assets under management (AAUM).
Investors may take a 5 to 10 per cent exposure to silver. 'Have a long-term investment horizon when investing in silver ETFs to ride out short-term market fluctuations.'
Six firms have qualified for managing EPFO funds.
EPFO is managing a corpus of Rs 6.5 lakh crore.
New fund offers collection in the current calendar year was the highest in a decade, with 13 of the 70 equity schemes cornering 75 per cent of the amount raised.
Mutual fund houses have been on an equity buying spree in the past three months as they have invested a net amount of Rs 55,000 crore in them between January and March 2023. The number is more than double the amount deployed in the preceding three months (October to December), signalling improved valuations and favourable economic indicators. The valuations, which had peaked in October 2021, returned to its long-term average in March 2023.
'It will be best for investors to have a systematic investment plan in mid-cap and small-cap funds with a three-/five-year horizon.'
While near-term performance is difficult to predict after a huge run-up, fund managers believe the PSU theme's prospects remain sound over the medium to long term.
Hamsini Karthik reveals why the ongoing business rejig will help unlock value for shareholders of Grasim, Reliance Capital and Tube Investments
An additional factor spurring the FMP launches is MFs' desire to retain investors as many such offerings are set to mature over the next two months.
Most market analysts are expecting the momentum to shift towards 'quality' and 'growth' stocks in 2024 after the outperformance of 'value' stocks over the past three years. 'Value' stocks are generally well-established companies with steady profits that are trading at a discount to what they are intrinsically worth. Companies in sectors such as commodities, industrials, commercial vehicles and public sector units (PSUs) fall in this bracket.
'As the Indian economy continues to expand over the next three years, mid- and small-caps should do well as they have higher exposure to the domestic economy than large-caps.'
Industry body Amfi to hold meeting to decide on road map.
Mutual funds provide the right opportunity to the millions of investors
In the face of tax blow, brokerages remain sanguine about the prospects of asset management companies (AMCs). A sharp correction in the shares of AMCs over the past three months factors in most of the negatives and turned valuations attractive, observe analysts. In its latest report, Kotak Institutional Equities (KIE) has upgraded HDFC AMC to 'add' (from 'reduce') and reprised 'add' and 'buy' ratings on the rest of the listed AMCs - Nippon, UTI, and Aditya Birla Sun Life.
'We have great demographics, and are the fastest growing large economy. And we save.' 'All of which is great for financial services,' Aditya Birla Capital CEO Ajay Srinivasan tells Niraj Bhatt.
A formal sector worker can contribute towards pension scheme till the age of 58.
Vishal Sikka who was made vice-chairman till his successor was appointed, also quit the board with immediate effect.
Ideally, one should opt for a 5 to to 10- year period in an MF scheme or exit when the goal is reached.
Though the sum was nowhere close to the big-ticket monthly purchases seen during the 2004-2008 bull run, it is significant, as it confirms the reversal of a selling spree that began in September 2013.
Omkeshwar Singh, Head, Rank MF, a mutual fund investment platform, answers your queries
In the 52 newly listed companies since 2014, fund managers have a total investment of a mere 2.5 per cent of their assets under management.
The policymaker said the RBI had not reached the point where specific actions were under consideration.
'It could tempt investors to pick stocks that are not fundamentally sound.'
Ask rediffGURU Ulhas Joshi your mutual fund queries.
Nikunj Saraf, Vice President Choice Wealth, answers your queries.
Omkeshwar Singh, head, Rank MF, a mutual fund investment platform, answers your queries.
Corrective measures are already being taken by fund managers - overall allocation to the IT firm has been pruned by 120 basis points, from 4.43 per cent in March to 3.24 per cent in July
Experts say the impact on the schemes' NAVs may vary in the coming days, depending upon how fund houses treat the developments on VIL and whether there are any further rating downgrades or credit events.
Ajit Mishra, vice president, research, Religare Broking, answers your queries.
