AMCs growing at a breakneck speed

The SEBI's move to approve several recommendations proposed by the mutual fund advisory committee (MFAC) on distributor commissions, total expense ratios (TER), limiting the additional incentive, etc. are expected to have an adverse effect on Asset Management Company (AMC) revenues and profits in future. But that doesn't take away from the fact that FY 2018 was a big year for the AMC industry in India, with assets under management clocking new records. Let us have a look at how AMCs, as businesses, fared. With assets growing at a breakneck speed, the AMC space saw total income of nearly Rs 14000 crore and bottom line surging over Rs 3500 crore. At an industry level For AMCs, 2018 was a watershed year. We looked at financial data available for 35 AMCs. So, numbers do not include Essel Mutual Fund, Franklin Templeton Mutual Fund, Invesco Mutual Fund and Mirae Asset Mutual Fund. Data shows that the 35 AMCs witnessed their collective AUM surge from Rs 16.4 lakh crore to Rs 20 lakh crore in just 12 months. Total income of these AMCs grew to Rs 13944.81 crore in FY18 compared to Rs 10700.34 crore in FY17. As a rate of total income growth, the increase of 30.3% witnessed in FY18 was the highest in six years. The superb top line growth has had a great effect on the net profit numbers too. For the 35 AMCs, net profit jumped to Rs 3583.47 crore in FY18 from Rs 2610.96 crore in FY17. The 37.2% year on year rise in profit is the biggest surge since FY2014. For those interested in net profit margins, i.e., net profit as a percentage of total income, the number was nearly 26%, which is among the highest since the MF industry came into existence. AMC Business FY 2018 2017 2016 2015 2014 Total income (Rs Cr) 13945 10701 8707 6623 5286 Growth YoY (%) 31 23 32 26 21 Net profit (Rs Cr) 3584 2611 2088 1541 1333 Growth YoY (%) 38 26 36 16 44 The above numbers do not mean all AMCs clocked profits. As many as 9 AMCs were still in the red in FY18, almost the same number in FY17. We will come to them a little later. Top 10 revenue earners in FY18 AMC Rs Cr ICICI Prudential Mutual Fund 1897 HDFC Mutual Fund 1867 Reliance Mutual Fund 1746 SBI Mutual Fund 1272 Aditya Birla Sun Life Mutual Fund 1261 UTI Mutual Fund 1058 Axis Mutual Fund 753 DSP Mutual Fund 752 Motilal Oswal Mutual Fund 668 Kotak Mahindra Mutual Fund 519 Top 10 profit-makers in FY18 AMC Rs Cr HDFC Mutual Fund 722 ICICI Prudential Mutual Fund 626 Reliance Mutual Fund 505 UTI Mutual Fund 376 SBI Mutual Fund 331 Aditya Birla Sun Life Mutual Fund 322 DSP Mutual Fund 201 Motilal Oswal Mutual Fund 131 Kotak Mahindra Mutual Fund 81 JM Financial Mutual Fund 57 A good way