HDFC ASSET MANAGEMENT COMPANY LIMITED 23^RD ANNUAL GENERAL MEETING

MUMBAI, WEDNESDAY, JUNE 29, 2022 (GPN): Mr. Deepak S. Parekh, Chairman, Housing Development Finance Corporation’s speech

AS PART OF MY COMMENTS TODAY, I WILL PROVIDE AN OVERVIEW OF THE INDUSTRY AND OF THE COMPANY’S OPERATIONAL AND FINANCIAL PERFORMANCE.

UPDATE ON THE ECONOMY

THE YEAR GONE BY WILL BE REMEMBERED AS A YEAR OF ROBUST RECOVERY AND RETURN TO NORMALCY DESPITE SUCCESSIVE WAVES OF THE PANDEMIC SWEEPING ACROSS MAJOR COUNTRIES. HOWEVER, CONTINUED DISRUPTIONS IN GLOBAL SUPPLY CHAINS AND SURGE IN DEMAND ALONG WITH THE GEOPOLITICAL TENSIONS PUSHED INFLATION HIGHER, PROMPTING POLICY ACTIONS BY CENTRAL BANKS.

IN INDIA, THE VACCINATION DRIVE WHICH STARTED IN LATE FY21, PICKED UP PACE AND OVER 80% OF INDIA’S ADULT POPULATION WAS VACCINATED BY YEAR END. THIS HELPED REDUCE THE SOCIAL AS WELL AS ECONOMIC IMPACT OF THE OMICRON WAVE IN FOURTH QUARTER OF FY22. ECONOMIC GROWTH IN INDIA ACCELERATED IN FY22, AS RESTRICTIONS EASED AND DEMAND NORMALISED, WHICH WAS FURTHER AIDED BY IMPROVEMENT IN EXPORTS AND SUPPORTIVE MONETARY AND FISCAL POLICIES. RISING INFLATION, HOWEVER, REMAINS A CONCERN, PROMPTING THE RBI TO UNDERTAKE AN OFF-CYCLE RATE HIKE OF 40 BPS IN MAY AND ADDITIONAL 50 BPS IN JUNE. THE INFLATION PRESSURE MAY  NOT SUBSIDE SOON, INCREASING THE POSSIBILITY OF FURTHER HIKES INTO FY23.

GOING FORWARD, THERE ARE REASONS TO BE OPTIMISTIC ON ECONOMIC GROWTH, ON THE BACK OF PROSPECTS OF NORMAL MONSOON, PICK UP IN DISCRETIONARY SPEND, ROBUST EXPORTS, IMPROVED BALANCE SHEETS OF CORPORATE AND BANKING SECTOR AND SIGNS OF REVIVAL IN PRIVATE CAPEX. FACTORS IMPACTING GROWTH OUTLOOK THAT NEED TO WATCHED OUT FOR INCLUDE GEOPOLITICAL CONFLICTS SUSTAINING FOR LONGER, TIGHTER FINANCIAL CONDITIONS, ELEVATED COMMODITY PRICES PARTICULARLY CRUDE OIL AND CONTINUED GLOBAL SUPPLY-CHAIN DISRUPTIONS.

INDUSTRY PERFORMANCE

THE MUTUAL FUND INDUSTRY’S OVERALL ASSETS UNDER MANAGEMENT (AUM) AS OF MARCH 31, 2022 ROSE 20% TO ₹ 37.6 LAKH CRORE. THE INDUSTRY ADDED 3.16 CRORE NET NEW FOLIOS AND THE TOTAL COUNT NOW STANDS AT 12.95 CRORE. SIP FLOWS GREW TO ₹ 12,328 CRORE FOR MARCH 2022 AND THE INDUSTRY SAW NEW REGISTRATIONS OF 2.66 CRORE SIPs.

DESPITE THE HEALTHY COMPOUNDED ANNUAL GROWTH RATE (CAGR) OF 16% IN AUM OVER THE PAST 5 YEARS, THE MF INDUSTRY IN INDIA REMAINS SIGNIFICANTLY UNDER-PENETRATED COMPARED TO GLOBAL AVERAGES. INDIA’S MF AUM‑TO‑GDP RATIO STANDS AT ONLY 16%, COMPARED TO THE GLOBAL AVERAGE OF 74%. OUR EQUITY AUM‑TO‑MARKET CAP WAS AT 6% AS AGAINST THE GLOBAL AVERAGE OF 33%.

INDIAN CAPITAL MARKET REGULATOR, SEBI HAS PLAYED A VERY IMPORTANT ROLE IN THE GROWTH OF THE INDUSTRY. IT HAS PLAYED THE DUAL ROLE OF BUILDING INVESTOR CONFIDENCE BY REGULATING THE INDUSTRY WHILE CREATING A CONDUCIVE ENVIRONMENT FOR GROWTH.

CO MPANY’S PERFORMANCE 

YOUR COMPANY’S ANNUAL AVERAGE AUM DURING FY 2021-22 WAS ₹4.37 LAKH CRORE AND CLOSING AUM STOOD AT ₹4.08 LAKH CRORE. EQUITY‑ORIENTED CLOSING AUM ACCOUNTED FOR ₹2.09 LAKH CRORE, WITH NON‑EQUITY‑ORIENTED AUM CONTRIBUTING THE REST. FLOWS THROUGH SYSTEMATIC TRANSACTIONS CONTINUE TO BE RESILIENT AND YOUR COMPANY SAW FLOWS ADDING UP TO ₹12,970 CRORE IN FY 22.

YOUR COMPANY REMAINS ONE OF THE MOST PREFERRED CHOICES FOR INDIVIDUAL INVESTORS, WITH A MARKET SHARE IN INDIVIDUAL AUM AT 12.5%. WE HAD ABOUT 58 LAKH UNIQUE INVESTORS AT THE CLOSE OF THE YEAR.

YOUR COMPANY ENDEAVOURS TO DELIVER SUSTAINABLE GROWTH THAT BENEFITS ALL STAKEHOLDERS AIDED BY OUR GOAL OF SPREADING FINANCIAL LITERACY, INCREASING THE ACCEPTANCE OF CAPITAL MARKET‑ORIENTED PRODUCTS AND DEEPENING MUTUAL FUND PENETRATION LEVELS IN THE COUNTRY. OUR WIDE AND ROBUST DISTRIBUTION NETWORK, NATIONWIDE PRESENCE, BEST-IN-CLASS DIGITAL INFRASTRUCTURE WILL CONTINUE TO BE THE BACKBONE OF OUR GROWTH.

YOUR COMPANY WANTS TO ENCOURAGE FINANCIAL INDEPENDENCE ESPECIALLY AMONGST WOMEN AND FOR THAT WE HAVE LAUNCHED CAMPAIGNS LIKE “BARNI-SE-AZADI” AND “LAXMI-FOR-LAXMI”. THROUGH THESE CAMPAIGNS WE WANT TO ACHIEVE OUR MISSION – ‘TO BE THE WEALTH CREATOR FOR EVERY INDIAN’ BY EMPHASIZING ON THE NEED TO SHIFT IDLE MONEY TO MORE GROWTH‑ORIENTED INSTRUMENTS LIKE MUTUAL FUNDS.

COMPANY’S FINANCIAL PERFORMANCE

OUR COMPANY’S PROFIT AFTER TAX (PAT) STOOD AT ₹1,393.13 CRORE AND GREW BY 5.08% OVER FY20- 21.

TOTAL INCOME HAS INCREASED BY 10.51% TO ₹2,433.20 CRORE IN FY21-22.

THE COMPANY’S NET WORTH INCREASED BY 15.78% TO ₹5,530.04 CRORE IN FY21-22.

DIVIDEND PAYOUT HAS BEEN INCREASED TO ₹42 PER SHARE FROM ₹34 PER SHARE LAST YEAR. THIS IS SUBJECT TO YOUR APPROVAL.-Ends-