HDFC AMC — Q1 FY26 earnings call

Call held 17 Jul 2025

Management summary

HDFC AMC reported a strong Q1 FY26, with closing AUM reaching INR 8.5 trillion, driven by a 21% Y-o-Y growth. Revenue from operations increased 25% to INR 9,678 million, and profit after tax grew 24% to INR 7,480 million. The company continued to see robust systematic transaction flows, adding 0.5 million unique investors, and secured SEBI approval for a Specialized Investment Fund to expand its product offerings.

Highlights

  • Closing AUM crossed INR 8.5 trillion, reflecting a 21% Y-o-Y growth.

  • Revenue from operations grew 25% Y-o-Y to INR 9,678 million.

  • Profit after tax grew 24% Y-o-Y to INR 7,480 million.

  • Operating profit grew 30% Y-o-Y with a stable operating profit margin of 36 basis points of AUM.

  • SIP flows remained strong, reaching INR 273 billion in June 2025, with contributing accounts growing to 86.5 million.

Concerns

  • Analysts noted a perceived expansion in yields (more than 1 bp) which management suggested taking offline, indicating a potential discrepancy in understanding or reporting.

  • Sequential increase in other operating expenses by INR 9-10 crores, primarily due to CSR expenditure timing.

Key financials

  1. Closing AUM ₹8.50L Cr +21%YoY
  2. Revenue from Operations 9,678 Mn +25%YoY
  3. Profit After Tax 7,480 Mn +24%YoY
  4. Operating Profit Growth — +30%YoY
  5. Operating Profit Margin 36 bps
  6. Equity-Oriented AUM ₹5.00L Cr +19%YoY

What they filed

Q1 FY27: revenue up 13.4%, net profit up 12.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue887 934 901 968 1,026 +16%1,074 +15%1,050 +17%1,098 +13%
EBITDA704 764 731 774 801 +14%877 +15%846 +16%852 +10%
Net profit577 641 639 748 718 +24%770 +20%623 −3%838 +12%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Market Share

  • Overall Market Share Market Share · Q1 FY26 · High confidence 11.5%
    Our closing AUM crossed INR8.5 trillion with an overall market share of 11.5% and a Y-o-Y growth of 21%.

    — Simal Kanuga

  • Market Share excluding ETF Market Share · Q1 FY26 · High confidence 12.8%
    Excluding ETF, our market share was 12.8%.

    — Simal Kanuga

  • Actively Managed Equity-Oriented Market Share Market Share · Q1 FY26 · High confidence 12.8%
    Actively managed equity-oriented assets grew by 19% year-on-year and crossed INR5 trillion with a market share of 12.8%.

    — Simal Kanuga

  • Debt Market Share Market Share · Q1 FY26 · High confidence 13.3%
    On the fixed income side, debt and liquid AUM grew by 22% and 17% Y-o-Y, respectively, with market share of 13.3% and 12.6%.

    — Simal Kanuga

  • Liquid Market Share Market Share · Q1 FY26 · High confidence 12.6%

    — Simal Kanuga

Expense

  • Noncash ESOP/PSU Expense Expense · Over vesting period (4 years) · Medium confidence INR 205-210 crores
    So, our estimates as per Black Scholes suggests that the noncash ESOP/PSU related expense would be between INR205 crores to INR210 crores over the vesting period.

    — Naozad Sirwalla

  • Noncash ESOP/PSU Expense Expense · FY26 · Medium confidence INR 56 crores
    So, the scheme would broadly result in a noncash charge of about INR56 crores in FY '26

    — Naozad Sirwalla

  • Noncash ESOP/PSU Expense Expense · FY27 · Medium confidence INR 63 crores
    around INR63 crores in FY '27

    — Naozad Sirwalla

  • Noncash ESOP/PSU Expense Expense · FY28 · Medium confidence INR 51 crores
    INR51-odd crores in FY '28

    — Naozad Sirwalla

  • Noncash ESOP/PSU Expense Expense · FY29 · Medium confidence INR 32 crores
    INR32 crores in FY '29

    — Naozad Sirwalla

  • Noncash ESOP/PSU Expense Expense · FY30 · Medium confidence INR 6 crores
    and about INR6-odd crores in FY '30.

    — Naozad Sirwalla

  • Residual ESOP Cost Expense · FY26 · High confidence INR 11 crores
    There is also a stub of the residual cost of the previous ESOPs scheme. That's around INR14 crores, INR11 crores of which is for FY '26

    — Naozad Sirwalla

  • Residual ESOP Cost Expense · FY27 · High confidence INR 3 crores
    and INR3 crores in FY '27.

    — Naozad Sirwalla

AUM Impact

  • ESOP/PSU Impact on AUM AUM Impact · FY26 · Medium confidence 0.8 basis points
    So, for FY '26 if I assume an average AUM of let's say INR8.5 trillion. The estimated impact is well below 1 basis point of AUM or to be exact about 0.8 basis points.

    — Navneet Munot

What to watch in Q2 FY26

Yields across segments

Next quarter
Current Equity ~58-59 bps, Debt ~27-28 bps, Liquid ~12-13 bps, Blended ~46 bps (as stated by management)
Target Clarification on perceived yield expansion vs. management's view

Why it matters

To understand the true trajectory of profitability and resolve the discrepancy noted by the analyst.

Somehow, it seems like, okay -- I'll get back, I'll check this offline. But it seems like there's a big expansion, more than 1 bp expansion in the quarter is what I feel, as per my numbers. ... No, I think we can take it offline Shivani.

Risks & concerns

  • Perceived Yield Expansion Discrepancy

    medium

    An analyst noted a perceived yield expansion of over 1 basis point, which management stated was 'not really any material expansion' and suggested taking offline, indicating a potential lack of clarity or differing interpretation of profitability metrics.

    Analyst downplayed

  • Impact of ESOP/PSU Costs on Profitability

    low

    The new ESOP/PSU scheme will result in noncash charges of INR 205-210 crores over the vesting period, with INR 56 crores in FY26, which, while noncash, represents a future P&L impact. Management clarified this is an investment in talent and the impact on AUM is minimal (0.8 bps).

    Management acknowledged

Q&A highlights

5 direct, 1 evasive
Yield Expansion Evasive
Somehow, it seems like, okay -- I'll get back, I'll check this offline. But it seems like there's a big expansion, more than 1 bp expansion in the quarter is what I feel, as per my numbers. ... No, I think we can take it offline Shivani.

Analyst perceived a significant yield expansion (over 1 bp) that management did not acknowledge and suggested taking offline, indicating a potential discrepancy or lack of transparency on a key profitability metric.

Asked by Shreya Shivani

HDFC Bank's Contribution to AUM Direct
The pie chart that you're looking at, right, it is basically, if other channels grow faster as compared to a bank, you will automatically see that pie chart shape up in the fashion it has. So, it is not necessary that we are losing a share or anything in HDFC Bank scheme of things.

Clarifies that a declining percentage contribution from HDFC Bank is a function of faster growth in other channels (like fintechs and direct) rather than a loss of share within the bank channel itself, indicating a broader industry trend.

Asked by Mohit Mangal

Flattish Yields Despite Equity AUM Growth Partial
So, it's basically a mix, right, what happens in terms of new asset sales or anything? Honestly, we would request you not to read too much into expansion or anything because that is not what we've been seeing. What tends to happen is certain other products get sold, some outgoing money would have been from a higher yielding or something. So, mix of all of these things would have attributed, but there is no other specified reason for margins to kind of expand or anything.

Analyst questioned why yields remained flattish despite strong equity AUM growth. Management attributed it to a mix effect from new sales and outflows from higher-yielding products, but did not provide specific data to support this, leaving some ambiguity.

Asked by Gaurav Jani

Sequential Increase in Other Operating Expenses Direct
Yes. So, some of it is the timing of the CSR expenditure actually, depending on how and when we spend our CSR, that moves the number. That's largely the material change.

Explains the INR 9-10 crores sequential increase in other operating expenses as primarily due to the timing of CSR expenditure, providing clarity on a cost fluctuation.

Asked by Gaurav Jani

Net Inflow Market Share Partial
I think, Madhukar, we have always stated, right, we don't really necessarily comment on our net inflow share. But I think as Navneet touched upon, I think our overall net flow market share is higher than our book market share.

Management declined to provide specific net inflow market share data, stating they don't comment on it, but indicated it's higher than their book market share, which is a qualitative positive but lacks specific quantification.

Asked by Madhukar Ladha

Alternative AUM Growth and Yields Direct
On the alternative side, we have two things, right? One is basically, we did a venture capital private equity fund of fund, which we closed last year with INR1,200-odd crores of AUM. We are currently in the raise mode when it comes to credit fund. The increase in AUM has also happened based on some of the inflows that we have seen under our non-discretionary portfolio management services accounts. In terms of yields, not very different as compared to our overall business.

Provides specific drivers for the growth in alternative AUM, including a closed VC/PE fund of fund and inflows into PMS accounts, and clarifies that yields from this segment are consistent with the overall business.

Asked by Lalit Deo

Strategy for Moving Customer Money Across Funds Direct
I mean, we don't do the asset allocation on behalf of our partners or on behalf of our investors unless it's an asset allocation product. So, in Dynamic Asset Allocation, which is the Balanced Advantage Fund for us, the fund manager would do some bit of allocation within the template that we would have or in a multi-asset fund.

Clarifies HDFC AMC's stance on asset allocation, stating they do not actively move customer money between funds unless it's a specific asset allocation product, emphasizing the role of distributors and investor choice.

Asked by Abhijeet

Product Per Customer and Stickiness Direct
Yes. I mean, I mentioned earlier, in a different context that we would like to optimize or maximize our share within each and every category. And that includes both, getting new customers, and of course, kind of like offering other products to the existing investors.

Management confirms their strategy to deepen relationships with existing customers by offering more products, aiming to maximize their share within each category, which is a key driver for long-term AUM growth and stickiness.

Asked by Abhijeet

3 min read 7 chapters

Detailed narrative

Strong AUM Growth and Market Share Performance

HDFC AMC's closing AUM reached INR 8.5 trillion as of June 2025, marking a 21% year-on-year growth. The company maintained an overall market share of 11.5%, which increased to 12.8% when excluding ETFs. Actively managed equity-oriented assets grew 19% year-on-year to INR 5 trillion, securing a 12.8% market share in this segment. Debt and liquid AUM also saw robust growth of 22% and 17% year-on-year, respectively, with market shares of 13.3% and 12.6%.

Robust Financial Performance

The company reported a 25% year-on-year increase in revenue from operations, reaching INR 9,678 million for Q1 FY26. Other income also grew significantly by 34% year-on-year, supported by mark-to-market gains on both equity and debt. Despite an increase in total costs to INR 2,144 million, operating profit for the quarter grew by 30% year-on-year, maintaining a stable operating profit margin of 36 basis points of AUM. Profit after tax saw a 24% year-on-year growth, amounting to INR 7,480 million.

Sustained Systematic Investment Flows and Investor Penetration

SIP flows remained strong, with monthly contributions reaching INR 273 billion in June 2025, and the number of contributing accounts growing to 86.5 million, up from 67 million a year ago. SIP AUM crossed INR 15 trillion, now accounting for 37% of actively managed equity-oriented AUM. The company added 0.5 million unique customers during the quarter, contributing to its unique investor penetration reaching 25% of mutual fund investors in the country. Systematic transactions (SIP + STP) stood at INR 40.1 billion in June 2025, up from INR 32 billion in June 2024.

New ESOP and PSU Scheme Details

HDFC AMC introduced a new ESOP and Performance Stock Unit (PSU) scheme with a 4-year vesting period, replacing an older 3-year scheme. The new scheme, approved by the NRC on June 20, 2025, involves 10 lakh ESOPs and 2.28 lakh PSUs, granted to over 800 employees (50% of the workforce). The estimated noncash expense for this scheme is INR 205-210 crores over the vesting period, with approximately INR 56 crores projected for FY26. Management views this as a long-term investment in talent, with an estimated impact of 0.8 basis points on AUM for FY26.

Expansion into Specialized Investment Funds (SIF)

The company has secured SEBI approval to establish a Specialized Investment Fund (SIF), opening a new avenue for product launches. This initiative aims to leverage HDFC AMC's strong foundation, investor base, and distribution network to offer a comprehensive investment platform that includes mutual funds, PMS, and alternative strategies. Management emphasized a focus on designing thoughtful offerings that align with their investment capabilities and investor feedback, rather than being the first to market.

Debt and Liquid Fund Performance and Outlook

Debt and liquid funds recorded significant net inflows during the quarter, with industry-wide inflows of INR 1.34 trillion and INR 609 billion respectively. Management attributed this to RBI measures improving system liquidity and a favorable outlook for interest rates, making debt markets attractive. The company maintains a constructive view on debt funds, noting that Q1 FY26 saw the highest-ever flows in the debt and liquid categories for the industry.

Asset Allocation Strategy and Investor Engagement

HDFC AMC clarified its approach to asset allocation, stating that it does not actively move customer money between funds unless it is an asset allocation product like the Dynamic Asset Allocation Fund. The company believes in investors holding money for the long term with a strategic asset allocation, as frequent technical adjustments do not necessarily lead to optimal wealth creation. Their strategy focuses on maximizing share within each category by acquiring new customers and cross-selling products to existing investors.

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