HDFC Asset Management Company Share price and Fundamental Analysis

Company History

HDFC Asset Management Company Limited (HDFC AMC) is the Investment Manager to HDFC Mutual Fund (HDFC MF), the largest mutual fund in India, with total AUM of Rs. 4,36,696 Crore as of March 31, 2023. HDFC AMC has a diversified asset class mix across Equity and Fixed Income/Others. It has a countrywide network of branches along with a diversified distribution network comprising Banks, Independent Financial Advisors and National Distributors. As on 31 March 2023, the Company had more than 75,000 empanelled distribution partners serviced through a total of 228 branches. As at March 31, 2023, Housing Development Finance Corporation Limited, the Holding Company owned 52.56% of the Company's Equity Share Capital.

The Company operates as a joint venture between Housing Development Finance Corporation Limited ('HDFC') and Standard Life Investments Limited ('SLI'). HDFC is one of India's leading housing finance companies. HDFC group has emerged as a recognized financial conglomerate in India, with presence in housing finance, banking, life and non life insurance, asset management, real estate funds and education finance. Listed companies of the HDFC group include HDFC Limited, HDFC Bank Limited, HDFC Standard Life Insurance Company Limited and GRUH Finance Limited, which had market capitalizations of US$46.87 billion (Rs. 3,209.38 billion), US$80.19 billion (Rs. 5,490.74 billion), US$13.41 billion (Rs. 918.01 billion) and US$3.25 billion (Rs. 222.47 billion), respectively, as of June 30, 2018. SLI is an indirect subsidiary of Standard Life Aberdeen pic ('Standard Life Aberdeen'), one of the world's largest investment companies, created in 2017 from the merger of Standard Life plc and Aberdeen Asset Management PLC. SLI operates within the brand Aberdeen Standard Investments; with its investment arm managing 575.7 billion (Rs. 49,666.50 billion) of assets as of December 31, 2017, making it one of the largest active managers in Europe. Standard Life Aberdeen is listed on the London Stock Exchange and had a total market capitalization of 9.70 billion (Rs. 876.72 billion) as of June 30, 2018.

The company offers a large suite of savings and investment products across asset classes, which provide income and wealth creation opportunities to customers. As of March 31, 2019, the company offered 147 schemes that were classified into 22 equity-oriented schemes, 115 debt schemes (including 72 fixed maturity plans ('FMPs')), 3 liquid schemes, and 7 other schemes (including exchange-traded schemes and funds of fund schemes). This diversified product mix provides them with the flexibility to operate successfully across various market cycles, cater to a wide range of customers from individuals to institutions, address market fluctuations, reduce concentration risk in a particular asset class and work with diverse sets of distribution partners which helps to expand its reach. The Company also provides portfolio management and segregated account services, including discretionary, non-discretionary and advisory services, to high net worth individuals ('HNIs'), family offices, domestic corporates, trusts, provident funds and domestic and global institutions.

HDFC Asset Management Company Limited was incorporated as a Public Limited Company on December 10, 1999 and obtained its certificate for commencement of business on March 9, 2000 from the RoC. It was approved to act as an Asset Management Company for HDFC Mutual Fund by SEBI on July 03, 2000. In September 2000, the company's Assets under Management (AUM) reached Rs 6.5 billion. In August 2001, Standard Life Investments became a shareholder of the company. In September 2002, the company's AUM crossed Rs 100 billion.

In June 2003, HDFC Asset Management Company acquired Zurich Asset Management Company Limited (ZAMC), having an AUM of Rs 34 billion. In January 2009, the company's AUM crossed Rs 500 billion. In October 2009, the company's AUM crossed Rs 1 trillion. In March 2011, HDFC Debt Fund for Cancer Cure was launched.

In March 2014, the company launched its second CSR oriented fund viz. HDFC Debt Fund for Cancer Cure 2014. In June 2014, the company acquired Morgan Stanley Mutual Fund schemes, having an AUM of Rs 19 billion. In September 2014, the company's AUM crossed Rs 1.5 trillion. In May 2016, the company's AUM crossed Rs 2 trillion. In April 2017, the company's Equity AUM crossed Rs 1 trillion. In December 2017, the company's AUM crossed Rs 3 trillion. During the financial year, the shareholders of the Company at their meeting held on January 16, 2014 approved the buy-back of equity shares of the Company from the shareholders of the Company through tender offer. The buy-back offer was completed within the time limits as prescribed under the Companies Act, 1956 and 1,41,500 equity shares of the Company were bought by the Company under the buy-back offer. The present paid-up capital post the buy-back offer is Rs. 25,24,08,000/-.

HDFC Asset Management Company' promoters viz. HDFC and Standard Life Investments Limited offloaded a total of 2.54 crore shares through an initial public offer (IPO) of during the period from 25 July 2018 to 27 July 2018. There was no fresh issue of shares by the company. HDFC offloaded 85.92 lakh shares and Standard Life Investments Limited offloaded 1.68 crore equity shares through the IPO. The IPO was priced at Rs 1,100 per share. The company's shares were listed on the bourses on 6 August 2018.

The Board of Directors recommended issue of Bonus shares in the ratio of 3:1 i.e. 3 new equity shares for every one equity share held and sub-division of equity shares of Rs.10/- each into two equity shares of Rs. 5/- each which was approved by the Shareholders at an extra-ordinary general meeting held on February 6, 2018. Accordingly, bonus shares were allotted to the members who held the equity shares on the Record Date i.e., February 5, 2018 by capitalization of balance in the free reserves amounting to Rs. 78.96 crores. Further, the equity shares of face value of Rs. 10/- each were sub-divided into two equity shares of face value of Rs. 5/- each by way of corporate action to the shareholders who held the shares on the Record Date i.e., February 13, 2018.

The Board of Directors at its meeting held on March 8, 2018 have accorded in-principle approval for issue of up to 16,00,000 equity shares of face value of Rs. 5/- each of the Company for cash consideration aggregating up to Rs. 210 crores by way of a private placement in accordance with the provisions of Sections 23, 42 and 62(1)(c) of the Companies Act, 2013 read with Rule 13 of the Companies (Share Capital and Debentures) Rules, 2014.

During the year 2018, the Board of Directors of the Company approved taking steps to initiate the process for an Initial Public Offering (IPO) of the Company by way of an offer for sale by Housing Development Finance Corporation Limited (HDFC Ltd) and Standard Life Investments Limited (SLI) in one or more tranches such that the post dilution shareholding of HDFC Ltd is at 50.01% and SLI at 24.99%. This is subject to relevant regulatory and other approvals, as applicable. Accordingly, the Company has filed Draft Red Herring Prospectus with Securities and Exchange Board of India on March 15, 2018. The Company is presently awaiting/will require approvals from SEBI and other regulatory authorities.

The Company has successfully undertaken Investment and Advisory services mandates during the financial year 2017-18 pursuant to approval received from Securities and Exchange Board of India (SEBI) with respect to undertaking Investment and Advisory services under Regulation 24(b) of the SEBI (Mutual Fund) Regulations, 1996. As on March 31, 2018, the aggregate asset under investment management/advisory services under this was Rs5099 crore.

During the year, the Company has completed its Initial Public Offering (IPO) through an offer for sale of equity shares. The equity shares of the Company were listed on National Stock Exchange of India Limited and BSE Limited on August 06, 2018.

Pursuant to the receipt of approval of the members at the Extra Ordinary General Meeting of the Company held on April 18, 2018, the Company issued and allotted 14,33,600 equity shares of the Company of Rs.5/- each at an issue price of Rs.1050/- per equity share aggregating to Rs.1,50,52,80,000/- by way of a private placement in accordance with Sections 62(1)(c), 42 and other applicable provisions, if any, of the Companies Act, 2013 including the Rules framed thereunder. The funds raised from the issuance of private placement were utilized for general corporate purposes including enhancement of the systems infrastructure.

HDFC Ultra Short Term Fund (the Open-ended scheme) was launched in the month of September 2018. The investment objective of the Scheme is to generate regular income through investments in Debt and Money Market Instruments while maintaining McCauley duration of the portfolio between 3 months and 6 months. The Scheme aims to generate income through investments in a range of debt and money market instruments. The Scheme would endeavor to generate returns commensurate with low levels of interest rate risk. The NFO of the Scheme mobilised assets to the tune of Rs.1161 Crore. As of March 31, 2019, HDFC MF offered 147 schemes across asset classes to meet the varying investment needs of investors.

During the year 2020, merger of certain Plans / Options under HDFC Floating Rate Debt Fund, HDFC Liquid Fund and HDFC Low Duration Fund was carried out, through an addendum dated April 4, 2019.

During FY 2020-21, the Company launched the HDFC Dividend Yield Fund and HDFC Banking ETF.

During the year 2020-21, changes in fundamental attributes were made to the following funds - HDFC Multi Asset Fund, HDFC Flexi Cap Fund (Erstwhile HDFC Equity Fund) & HDFC Capital Builder Value Fund, details of which were announced through addendum's dated 21st December 2020, 22nd December 2020 & 13th January 2021 respectively. HDFC Housing Opportunities Fund was converted to an open-ended equity scheme following Housing and Allied Activities Theme, details of which were announced through an addendum dated 12th December 2020.

During the year 2022, Company launched HDFC Asset Allocator Fund of Funds, for investors.

During the year 2022, mergers of following schemes were announced: 1) HDFC Long Term Advantage Fund, HDFC EOF - II - 1126D May 2017 and HDFC EOF - II - 1100D June 2017 (1) into HDFC Large and MidCap Fund and creation of segregated portfolio in HDFC Large and MidCap Fund vide notice cum addendum dated December 9, 2021 and 2) HDFC FMP 1265D October 2018 (1), HDFC FMP 1246D November 2018 (1), HDFC FMP 1127D March 2019 (1), HDFC FMP 1120D March 2019 (1), HDFC FMP 1118D March 2019 (1) and HDFC FMP 1100D April 2019 (1) into HDFC Corporate Bond Fund, vide notice cum addendum dated March 15, 2022.

The Company has 228 branches as on March 31, 2023. As on March 31, 2023, the aggregate assets under these services were at Rs 1,825 Crore. The Company announced first close of HDFC AMC Select AIF FOF on March 31, 2023 adding up to Rs 400 Crore.

During the year 2023, mergers of the schemes announced were HDFC FMP 1381D September 2018 (1) and HDFC FMP 1372D September 2018 (1) into HDFC Corporate Bond Fund and HDFC FMP 1344D October 2018 (1) into HDFC Medium Term Debt Fund dated May 16, 2022.

HDFC AMC International (IFSC) Limited / HDFC IFSC / Fund Management Entity was incorporated a wholly owned subsidiary company in Gujarat effective May 27, 2022. The Company launched HDFC AMC Select AIF FOF - I and All Caps PMS and India Ascent Portfolio in year 2023. Equity-oriented schemes constituted 56% of its total AUM and debt-oriented schemes constituted 44% of the total AUM as of March 31, 2023 respectively. Further, it launched Category II AIF fund of funds (HDFC AMC Select AIF FOF) during the year 2022-23.