Release Date: April 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aditya Birla Sun Life AMC Ltd (BOM:543374, Financial) achieved its highest ever profitability in FY24, with profit before tax up 27% year-on-year and profit after tax up 31% year-on-year.
- The company saw a significant increase in its SIP (Systematic Investment Plan) numbers, with a 23% quarter-on-quarter increase in Q4 FY24.
- The mutual fund industry witnessed a 34% year-on-year growth in quarterly average AUM, reflecting strong market performance.
- Aditya Birla Sun Life AMC Ltd (BOM:543374) added approximately 11.5 lakh new portfolios in the year, with 7 lakh added in Q4 FY24 alone.
- The company announced a proposed dividend of INR13.5 per share for FY24, reflecting strong financial health and shareholder returns.
Negative Points
- There was an increase in both employee expenses and other expenses in Q4 FY24, partly due to true-up on bonuses and one-off events.
- Despite strong performance, the company experienced a slight drop in equity yields due to telescopic pricing as AUM increased.
- The passive assets saw a reduction due to the maturity of some debt-oriented index funds, indicating potential volatility in this segment.
- The company is still working on improving its market share in SIPs, which has decreased from its peak of 13-14% in 2019-2020 to around 6.5% currently.
- There are concerns about redemption pressures in certain equity schemes, although these have been gradually reducing.
Q & A Highlights
Highlights from Aditya Birla Sun Life AMC Ltd (BOM:543374) Q4 FY24 Earnings Call
Q: Can you explain the sequential expansion in top-line yields and provide details on yields for specific products?
A: The increase in revenue aligns with AUM growth and the mix of equity and debt AUM. Equity yields are around 68 basis points, debt yields are 23-25 basis points, and liquidity yields are 12-13 basis points. The increase in people costs is due to bonus true-ups, and other expenses include one-off events like the annual investment conclave.
Q: What are the trends in SIP flows and which schemes are seeing higher growth?
A: The uptick in SIPs is due to improved equity performance and renewed focus on building SIPs. Significant flows are seen in Flexicap, mid-cap, and small-cap funds, with around 45-50% coming from online platforms and the rest from traditional distribution channels.
Q: How has the redemption pressure in core equity schemes changed?
A: Redemption pressures have reduced due to improved performance in several schemes. The trend is now showing both reduced redemptions and increased inflows, leading to a net positive impact.
Q: Can you provide details on the SIP AUM at the end of March?
A: The SIP AUM at the end of March stood at INR 69,168 crore.
Q: What are the expectations for ISOP expenses and employee count for FY25 and FY26?
A: ISOP expenses for FY24 were around INR 23-24 crore. The employee count is approximately 1,450. SIP flows are expected to maintain a monthly run rate of around 2 lakh registrations.
Q: What is the product pipeline for the next few quarters?
A: The pipeline includes a corn fund to be launched post-election and a thematic fund under development. The AIF and PMS segments are expected to see increased traction due to good performance and new product offerings.
Q: How do you plan to improve market share in SIPs and equity flows?
A: The focus is on improving sales productivity, building SIPs, and enhancing engagement with digital platforms. The aim is to achieve an 8-9% market share in SIPs by leveraging existing channels and expanding into new customer segments.
Q: What is the outlook for passive funds and their impact on market share?
A: While passive funds are gaining traction, active funds have performed better in the past year. The strategy is to build capabilities in both active and passive segments, with a focus on differentiated products in the passive space.
Q: How do you see the trend in equity yields and debt yields evolving?
A: Equity yields are expected to remain around 68 basis points, with a slight drop due to telescopic pricing. Debt yields may see an improvement if there is a shift towards longer-duration products.
Q: What are the revenue expectations from the PMS and AIF segments for FY24?
A: Revenues from PMS and alternate assets, including offshore and onshore funds, are expected to be around INR 100 crore.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
