HDFC MF guidance signals revenue fall after Sebi diktat; Q3 net up 25%

The HDFC Mutual Fund (MF) on Monday reported healthy financial performance, but guided for reduction in revenues after the Securities and Exchange Board of India’s (Sebi) mandated that all scheme-related expenses have to be borne into the schemes.

“SEBI circular dated October 22, 2018 has banned payment of upfront commission and mandated a full trail model for distributor commission. It has further mandated that all scheme related expenses including distributor commission shall have to be paid by the schemes of the MF and not by the AMC. As a result, HDFC AMC’s expenses will decrease since the scheme related expenses will be borne by the schemes of the MF and consequently the companies revenue will reduce accordingly,” HDFC MF said in its press release.

In December quarter, the fund house saw its net profit jump 25 per cent on a year-on-year basis to Rs 243 crore.

For the nine months-ending December 31, the company’s operating profit rose 20 per cent (y-o-y) to Rs 839 crore. For the same period, the company’s net profit was up 21 per cent (y-o-y) to Rs 654 crore.

The MF's total assets under management (AUM) was up to Rs 3.29 trillion as of December 31, 2018, which was 12 per cent higher than the AUM tally as of December 31, 2017.

The MF’s AUM in actively managed equity oriented funds (equity oriented total AUM excluding arbitrage funds and index funds) grew to Rs 1.5 trillion with the fund house’s market share at 16 per cent as of December 31, 2018.