We anticipate asset management plays will advantage from the enhancing equity mix for the third successive quarter in Q2FY22e. End to finish, equity AUM has grown by 21% amongst Mar’21 and Aug’21. This was aided by robust equity flows (dominated by NFOs in Jul-Aug’21) of Rs 1.2 trn (ex-Index/passive and which includes hybrid funds) in 5MFY22-TD and enhancing SIP book (flows and folios).
This has resulted in a robust possibility of earnings upgrades in FY22. Factoring in the 5MFY22-TD overall performance, relative expense structures and RoE, we upgrade FY22/23 earnings estimates for Nippon Asset Management (NAM) by 14%/ 12%, UTI Asset Management (UTI AMC) by 14% / 20% and HDFC asset management enterprise (HDFC AMC) by 4.7%/ 2%. We keep Purchase on UTI AMC and ADD on NAM though we downgrade HDFC AMC from Add to HOLD.
Assessing the overall performance of listed AMCs in 5M-FY22TD: Based on AMFI classification, NAM has been capable to develop equity and debt AUM by 18% and 13%, respectively, in 5MFY22-TD. UTI AMC has been capable to develop the exact same by 23% and (-)8% though HDFC AMC has grown it by 12%/1%. We now aspect in 16%/32%/29% AAUM development in FY22E for HDFC/NAM/UTI AMC.
Maintain Purchase on UTI AMC with a revised TP of Rs 1,410 (earlier: Rs 1,200) based on 30x FY23E core EPS of Rs 37.4 and money of Rs 288 per share. Maintain ADD on NAM with a revised target cost of Rs 477 (earlier: Rs 430) based on 35x FY23e core EPS of Rs 12 and money of Rs 58 per share. Downgrade HDFC AMC from Add to HOLD with a revised TP of Rs 3,350 (Rs 3,284) based on 45x FY23e core EPS of Rs 67.8 and Rs 298 money per share. We aspect in 16%/15% AAUM development for FY22E/FY23E with yields of 48.8bps/ 48bps, respectively (compared to 48.7bps in Q1FY22). Higher than anticipated development in AUM can be a positive trigger for earnings going forward. However, larger than anticipated drop in all round yields can lead to earnings disappointment.
Strong NFOs have characterised FY22-TD: On ex-ETF basis, MFs raised Rs 172 bn and Rs 237 bn in Jul’21 and Aug’21, respectively. In FY22-TD, total quantity raised even though NFOs has been Rs 479 bn vs Rs 293 bn raised in FY21.
Movement in equity market place share: Based on closing month-to-month AUM information, HDFC AMC equity AAUM market place share declined from 12.7% in Jun’21 to 12.1% in Aug’21. NAM equity AAUM market place share fell from 6.84% in Jun’21 to 6.76% in Aug’21. The exact same for UTI AMC enhanced from 4.76% in Jun’21 to 4.82% in Aug’21.
Movement in debt market place share: Based on AMFI information, debt AAUM market place share amongst Jun’21 and Aug’21 changed from 14.4% to 14.5% for HDFC AMC, 7.3% to 7.6% for NAM and 3.8% to 3.7% for UTI AMC.
Flows dominated by Flexi cap in Aug’21: Aug’21 all round inflows into MF schemes have been Rs 330 bn vs Rs 146 bn outflows seen in Aug’20.
Improving trends in SIP: Aug’21 SIP flows stood at Rs 99 bn vs Rs 91.6 bn in Jun’21 and Rs 96.1 bn in Jul’21. Industry added 2.5mn new SIP accounts in Aug’21 vs the 1.7mn month-to-month typical in Q1FY22. SIP AUM stood at Rs 5.3 trn, up 5% m-o-m.