HDFC AMC has witnessed its net profit (PAT) rise by 36% to Rs 1,262 crore in FY 2019-20, as against Rs 931 crore in the preceding FY i.e. FY 2018-19.
An analysis of earnings growth of the fund house shows that reduced expenses incurred on distribution has helped the fund house report strong earnings. Regulatory changes such as banning upfront commission and asking AMCs to pay commission from the scheme instead of AMC's book have helped the fund house reduce their expenses incurred on distribution commission.
The AMC incurred expenses worth Rs 21 crore as fees and commission in FY 2019-20, as against Rs 240 crore in the preceding fiscal.
Another factor that has contributed to the profit is the introduction of the corporate rate tax cut. In FY 2019-20, the company's tax expenses reduced to Rs 391 crore from Rs 440 crore in FY 2018-19.
Rise in revenue from operations also contributed to the increase in net profit. The fund house's revenue rose to Rs 2,143 crore from Rs 2,097 crore in FY 2018-19.
Reduction in HDFC AMC's other income that includes income from various investments has impacted the company's bottomline. In FY 2019-20, the other income of HDFC AMC reduced to Rs 140 crore from Rs 182 crore in the preceding fiscal largely due to mark-to-market loss.
