AMCs Q2 Results Preview - Strong Equity Flows May Drive Earnings Upgrade: PL Capital

PL Capital Report

Industry monthly average assets under management as at August 2024 stood at Rs 66.0 trillion and equity/debt share was 55%/15%. Equity flows continue to remain strong; excluding NFOs, July-24 and Aug-24 together saw net flows of Rs 637 billion compared to Rs 850 billion in Q1 FY25. Equity QAAuM growth is likely to be strong yet again in Q2 FY25 as industry overall QAAuM grew by 12.3% QoQ to Rs 66.2 trillion, while closing equity AuM (incl balanced) saw healthy quarter-to-date growth of 8.2% in Aug-24.

We would most likely upgrade AMC earnings for FY25/26E post Q2 FY25, due to strong closing equity AuM growth led by healthy flows and mark-to-market gains.

We expect AMCs in our coverage to see overall/equity QAAuM growth of 12.5%/14.3% QoQ (versus 9.9%/10.9% in Q1 FY25). Equity QAAuM growth would be superior for Nippon Life and HDFC Life at 16.3% and 14.4% QoQ, respectively, due to strong equity performance, while core income for our coverage AMCs could grow by 15.6% QoQ. HDFC AMC is our preferred pick in the AMC space.

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