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MF News Majority of fund houses witness profits in FY2016-17

Majority of fund houses witness profits in FY2016-17

Of 34-fund house, 26 AMCs have reported profits last fiscal.
Padmaja Choudhury Nov 8, 2017

An analysis of profit figures of AMCs shows that of 34 AMCs, 26 have reported profits in FY2016-17.

Experts attributed rise in profitability to the growth in retail assets in equity funds. AMFI data shows that the AUM of equity funds rose 40% and the industry added 77 lakh retail folios in FY 2016-17.

Apart from mutual fund business, AMCs derive profits from portfolio management, alternative investment funds and offshore advisory services.

In fact, Motilal Oswal AMC has witnessed a healthy growth in its profitability. The fund house has recorded PAT of Rs.51 crore that is higher than some big AMCs. The fund house has witnessed healthy growth in its PMS and advisory business. According to the AMC’s financial report, the fund house has close to 22,000 PMS clients with assets of Rs.10,000 crore as on March 2017. In addition, the AMC provide advisory services to 10 corporate clients for assets of Rs.610 crore.

In percentage terms, Tata AMC recorded the highest growth in profits. The financial data shows that the fund house has witnessed eight times growth in its PAT i.e. from Rs.5 crore in FY 2015-16 to Rs.40 crore in FY 2016-17.

In absolute terms, HDFC AMC continued to be the most profitable AMC at Rs.550 crore last fiscal. Among the top ten fund houses, ICICI Prudential AMC witnessed the highest increase in profits. Its profits increased by nearly Rs.155 crore to Rs.480 crore. ICICI Prudential AMC had overtaken Reliance Nippon Life AMC for the second position. The profit of Reliance Nippon Life AMC stood at Rs.370 crore in FY 2016-17.

However, a few AMCs witnessed decline in their profit margins. Kotak Mahindra AMC witnessed the highest decline in profit figures last fiscal. Its profit decreased to Rs.38 crore from Rs.59 crore in FY 2016-17.  Though the AUM of the fund house grew by 40%, the company saw decline in its profitability due to increase in expenses. The company has increased its marketing expenses by 58%, says the financial report of the fund house.

IDFC AMC profits decreased to Rs.97 crore in FY 2016-17 from Rs.110 crore in the preceding fiscal. Vishal Kapoor, CEO, IDFC AMC told Cafemutual that his company has invested to expand its business. “We have invested to expand our offerings and strengthen our investment team. However, we still have a healthy profit numbers if you look at the proportion of profit to the total AUM.”

On the other hand, a few AMCs such as Union and Edelweiss reported loss largely due to amortisation. While Union Mutual Fund acquired the entire stake from the KBC Asset Management, Edelweiss MF took over schemes of JP Morgan AMC in FY 2016-17. 

G Pradeepkumar, CEO, Union AMC says, “We have incurred higher expenses in growing our business. However, we expect it to come down significantly in the coming years,” says Pradeepkumar.

Cafemutual could not access the financial results of a few fund houses.  Also, we have excluded AMCs like Mirae Asset and Franklin Templeton as they follow a January to December calendar.   

 

PAT of fund houses

AMC

2015-2016

2016-2017

difference

HDFC

477

550

73

ICICI Pru

325

480

155

Reliance

370

405

35

UTI

232

291

59

SBI

165

224

59

Aditya Birla Sun Life

209

221

12

IDFC

110

97

-13

DSPBR

77

85

8

Axis

31

57

26

Motilal Oswal

26

50

23

JM Financial

44

45

0.14

Tata

5

40

35

Kotak Mahindra

59

38

-21

Sundaram

4

31

26

HSBC

16

26

10

Canara Robeco

15

16

1

IIFL

22

15

-7

BNP Paribas

11

13

2

DHFL Pramerica

-33

8

40

IDBI

3

7

4

Indiabulls

2

6

5

PPFAS

4

6

2

Taurus

13

6

-7

Baroda Pioneer

-5

2

7

LIC

1.01

1.57

1

Quantum

3.37

0.02

-3

Sahara

-5

-4

1

Principal Pnb

-13

-4

10

Shriram

-4

-5

-0.6

Edelweiss

-4

-7

-3

BOI AXA

-17

-13

5

Mahindra

-4

-20

-16

Union

-19

-23

-4

Invesco

-16

-55

-39

Peerless

-10

N.A

-

L&T

-51

N.A

-

Escorts

-0.5

N.A

-

 

  

Source: company disclosures

 

 

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