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Illustration by Binay Sinha
Stocks in capital market-related sectors like asset management companies (AMCs) and brokerage firms are on a roll as they have soared up to 15 per cent on the BSE during intraday trading on Wednesday, in an otherwise weak market.
This comes after HDFC AMC and Angel One reported strong results for the September quarter (Q2FY25).
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Stocks of HDFC Asset Management Company (AMC), Nippon Life India Asset Management, Aditya Birla Sun Life AMC, Motilal Oswal Financial Services (MOFSL), Computer Age Management Services (CAMS), IIFL Securities, Nuvama Wealth Management and UTI Asset Management Company reached their respective new heights.
These stocks are trading higher in a range of 4 to 15 percent. In comparison, the BSE Sensex was down 0.18 percent at 81,670 at 2:14 p.m.
Among individual stocks, Aditya Birla Sun Life AMC hit a record high of Rs 803.80 as they surged 15 per cent on the back of a more than 10-fold increase in average trading volumes. A total of 7.07 million shares changed hands on the NSE and BSE.
According to media reports, Aditya Birla Sun Life AMC plans to expand its alternative businesses with the launch of three new funds in the private credit space. With growing interest from Indian high net worth individuals (UHNIs) and family offices in Tier 2 cities, the CMA has pegged the opportunity in India’s performance credit market at $100 billion. The CMA expects the private credit segment to reach $3.5 trillion by 2028 in India.
HDFC AMC also hit a fresh high of Rs 4,862, up 7% after reporting a strong set of Q2FY25 numbers amid rising stocks and market share overall stable. The stock of the HDFC group company was trading higher for a seventh consecutive day, up 18 per cent during the period.
In Q2FY25, HDFC AMC reported growth of 9% quarter-on-quarter (QoQ) and 47% year-on-year (YoY) in assets under management (AUM ) to Rs 7.69 trillion, driven by growth in assets under management (10 percent QoQ and 62 percent YoY).
The company’s operating revenue grew 38% YoY and 14% QoQ to Rs 887 crore, driven by growth in assets under management and recovery in yield (~2 basis points in quarterly change in closing assets under management) at around 46 basis points. Operating expenses remained under tight control with growth of 12 percent year-on-year, however, higher tax expenses (one-off due to capital gains tax change and withdrawal of indexation benefit) resulted in 32 percent year-on-year growth in profit after tax to Rs 577. crore (-4 percent QoQ).
ICICI Securities said HDFC AMC’s operational performance continues to remain strong, coupled with healthy growth in assets under management. Although the stock remains a structural growth driver in the asset management industry in the long term, the recent rise in valuation appears to be factoring in short-term triggers, he adds.
Shares of Angel One climbed 5 per cent to Rs 3,394, climbing 25 per cent in two days after the company reported a 44 per cent year-on-year rise in its consolidated profit after taxes (PAT) at Rs 423.4 crore in the second quarter of FY25. The total income of the stock broking and allied services company increased 8% year-on-year to Rs 1,516 crore during the quarter.
Angle One recorded continued healthy performance driven by strong customer acquisition (around 3 million customers in Q2FY25) and increase in customer financing portfolio (around 25% sequentially). The number of orders increased by 5.8 percent quarter-over-quarter, mainly driven by improvement in the liquidity segment. With a 19.3 percent share in overall retail stock revenue, the company’s management said it continues to report improving market share across all segments.
CAMS shares hit a new high of Rs 4,920, up 6 per cent in intraday trade. The stock has surpassed its previous high of Rs 4,911.15 reached on July 31, 2024. The company is the largest registrar and transfer agent of mutual funds in India with an overall market share of around 68 percent based on average mutual fund assets under management (AAUM).
With the mutual fund industry showing very positive signs, as evidenced by healthy capital inflows, record level of assets under management, healthy SIP flows from disciplined retail investors and a vibrant stock market, the company is expected to maintain its growth in the Registrar and Transfer Agent (RTA) business.
Meanwhile, HDFC AMC, in its annual report for FY24, said the increase in domestic investments, especially in mutual funds, is a testament to India’s economic outlook and investor confidence . This trend highlights the exponential growth potential of our capital markets, mirroring the remarkable trajectory observed in the United States since 1980.
The current rise in SIPs in India bears some resemblance to the 401(k) movement in the United States. As household savings are channeled into mutual funds, the asset management sector is poised for substantial expansion, promising widespread participation in India’s economic growth.
This positive outlook highlights India’s ability to become a significant global economic force, fueled by innovation, investment and inclusive development. Strategically positioned, HDFC AMC aims to leverage the opportunities offered by the Indian asset management industry, the company said.
The outlook for equities remains positive in the medium to long term given the structurally robust domestic growth outlook, good corporate profitability and supportive government policies. However, it is critical to recognize that any sharp slowdown in global growth, escalation of geopolitical tensions and re-acceleration of inflation globally or locally remain the key near-term risks, HDFC AMC said.
First publication: October 16, 2024 | 2:53 p.m. STI
