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AMCs report profit growth of 6.2% in FY17

With investor flows picking up pace, mutual fund firms are continuing to report good results. Read the full report

AMCs report profit growth of 6.2% in FY17

The mutual fund industry reported 6.2% growth in net profit for FY17 on the back of nearly 11% rise in total income that topped Rs 10,000 crore. Let's do a deep-dive on how some of individual AMCs have performed in FY17. Read on.

The biggest and the smallest
In FY17, growth rates have obviously moderated after a bumper FY16 and ensuing base-effect. For FY17, the list of top ten AMCs by revenue is led by HDFC Mutual Fund (Rs 1587.91 crore), Reliance Mutual Fund (Rs 1400.44 crore), ICICI Prudential Mutual Fund (Rs 1349.73 crore), Aditya Birla Sun Life Mutual Fund (Rs 988.28 crore) and UTI Mutual Fund (Rs 853.18 crore). The others in top 10 are SBI MF, Axis MF, DSP BlackRock MF, L&T MF and Motilal Oswal MF.

It must be noted that AMCs make money from fees collected from investors. So, the size of an AMC enables it to benefit from economies of scale, particularly in the areas of fund management, marketing and distribution. Large AMCs also have strong relationships with distributors and investors, consisting of individual (retail and HNIs) and institutional investors. In FY17, the top 2 AMCs grew by 6-10%. Barring UTI MF, all the other 7 AMCs grew its total income in the 30-80% year on year range.

10 most profitable AMCs in FY2017

AMC Net profit (₹cr) Growth (%)
HDFC Mutual Fund 550.25 15.14
ICICI Prudential Mutual Fund 480.47 47.52
Reliance Mutual Fund 401.96 8.59
UTI Mutual Fund 290.81 25.32
SBI Mutual Fund 224.32 35.66
Aditya Birla Sun Life Mutual Fund 221.1 5.54
IDFC Mutual Fund 97.28 -11.59
DSP BlackRock Mutual Fund 85.46 10.47
Axis Mutual Fund 56.96 80.02
Motilal Oswal Mutual Fund 49.76 88.24
*Numbers for Escorts, Franklin Templeton and Mirae not available

The ten smallest AMCs haven't managed to individually even report Rs 40 crore as total income in FY17. This list contains names like Sahara Mutual Fund, Shriram Mutual Fund, Mahindra Mutual Fund, Peerless Mutual Fund, Union Mutual Fund, PPFAS Mutual Fund, Taurus Mutual Fund, Quantum Mutual Fund, Edelweiss Mutual Fund and Indiabulls Mutual Fund. Four AMCs reported a year on year drop in total income in FY17. This includes Taurus Mutual Fund, Sahara Mutual Fund, IDFC Mutual Fund and HSBC Mutual Fund.

In terms of profits, the bigger players rule the roost. This list is also led by HDFC MF with FY17 net profit at Rs 550.25 crore, clocking a growth rate of over 15% year on year. Its followed by ICICI Pru, Reliance, UTI, SBI, Aditya Birla Sun Life, IDFC and others. Reliance and Aditya Birla Sun Life have reported single-digit profit growth in FY17. IDFC MF in fact has reported 11% drop in profit. AMCs derive maximum profit from equity funds, where fees are typically higher than debt products. Industry experts also suggested that management of retail assets is more profitable for AMCs compared to overseeing institutional money, though upfront costs for garnering retail money is higher.

As many as 10 AMCs posted losses in FY17. This includes Invesco Mutual Fund (Rs -38.54 crore), L&T Mutual Fund (Rs -25.81 crore), Union Mutual Fund (Rs -22.72 crore), Mahindra Mutual Fund (Rs -20.47 crore), and BOI AXA Mutual Fund (Rs -12.66 crore).

10 biggest AMCs by revenue in FY2017

AMC Total income (Rs cr) Growth (%)
HDFC Mutual Fund 1587.91 6.26
Reliance Mutual Fund 1400.44 10.18
ICICI Prudential Mutual Fund 1349.73 33.33
Aditya Birla Sun Life Mutual Fund 988.28 30.63
UTI Mutual Fund 853.18 13.82
SBI Mutual Fund 777.87 40.82
Axis Mutual Fund 530.97 39.59
DSP BlackRock Mutual Fund 511.43 32.24
L&T Mutual Fund 351.86 41.21
Motilal Oswal Mutual Fund 341.35 84.46
*Numbers for Escorts, Franklin Templeton and Mirae not available

Industry snapshot
On the whole, FY17 has been a good year for the AMCs. Our data shows that for financial year ended March 2017, as many as 36 AMCs have reported 6.2% rise in net profit (at Rs 2564 crore) on the back of 10.87% growth in total income at Rs 10812 crore. In FY16, 39 AMCs had reported 36.5% jump in net profit at Rs 2414 crore and 31% spurt in total income at Rs 9752 crore.

FY17 numbers for Escorts, Franklin Templeton and Mirae were not immediately available. Do note that for Franklin Templeton, and Mirae, the fiscal year ends in December, and not March.

Here is a consolidated view of last 3 years' profits and income

  FY17 FY16 FY15
Net Profit (Rs cr) 2564.12 2414.2 1768.14
YoY growth (%) 6.21 36.53 NA
Total Revenue (Rs cr) 10812.9 9752.47 7451.15
YoY growth (%) 10.87 30.89 NA
No. of AMCs* 36 39 39
*Franklin Templeton, Mirae fiscal year ends in December