SECTOR UPDATE 13 MAR 2019

Insurance/AMC/Broking Tracker

HDFC securities Institutional Research is also available on Bloomberg HSLB <GO> & Thomson Reuters

Feb-19: Pvt. insurers Indiv NBP grows +19% YoY; MF flows declined to Rs 40bn

Private life insurers’ individual NBPs grew 19% YoY to Rs 43bn in Feb-19 (FY19TD growth 16%). Mutual fund equity (ex. arbitrage and ETF) net inflows on the other hand declined to a 32-month low of Rs 40bn in Feb-19 i.e. 60% below FY19TD monthly average of Rs 100bn.

We believe this is an interesting time to track net inflows to these savings options, as SEBI has banned upfront commission payouts for MF sales by AMCs, while life insurers continue to pay out heavily. We believe this tilts the scale in favour of the insurers, as we expect distributors to push insurance (ULIPs) given the higher commissions and upfronting of payouts.

While we cannot attribute the outperformance of insurance solely to the above reason (as this is also a seasonally strong time for insurance), we do believe that incongruous commission structures do change distributor behavior.

Equity market trading volumes continue to be dominated by F&O volumes as share of F&O in the mix has increased to 95.9% +150/-40bps YoY/MoM and total market ADTVs (ex-prop) increased 21.3/-0.9% YoY/MoM to Rs 6.3tn in Feb-19.

Insurance: After two strong years of Indiv APE growth of ~25% p.a. we expect FY19E APE growth to moderate to ~12% i.e. FY19E total Individual APE ~Rs 400bn. Our top pick in the sector is SBILIFE with TP of Rs 750. Our TP implies a FY20/21E Implied P/VNB of 21.4/16.7x.

AMC: While we expect near-term lump-sum equity inflows to remain weak due to tepid market conditions, flows to SIPs are expected to support overall equity inflows. We expect equity net inflows of ~Rs 1.2 (-54% YoY) in FY19E. We cover RNAM in the space and have a BUY rating with a TP of Rs 200. TP does not factor in removal of promoter overhang, which will play out as and when RCAP exits RNAM. This will result in our TP increasing to Rs 230-250 i.e. 5.2-5.7% of FY20E AUM.

Broking: With continued rise of discount broking, we remain cautious on broking as yields are expected to remain under pressure and mix continues to favor of lower yielding F&O. We have a NEUTRAL stance on ISEC with TP of Rs 298.

Madhukar Ladha madhukar.ladha@hdfcsec.com +91-22-6171-7323

Keshav Binani keshav.binani@hdfcsec.com +91-22-6171-7325

INSURANCE/AMC/BROKING TRACKER

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Life insurance Feb-19: Growth continues as pvt. insurers Indiv NBP/APE grows +19/16% YoY

Individual business Individual NBP and APE growth for private players

was strong in Feb-19 at +19% YoY (FY19TD at 16%) and +16% YoY (FY19TD at +12%) respectively.

LIC NBP/APE rose 17/7% YoY while total industry (including LIC) NBP/APE growth was 18/12%.

Private companies (ex. SBILIFE and IPRU) recorded NBP growth of 18% in Feb-19 and 25% YTDFY19.

SBILIFE recorded above expected Individual NBP/APE of Rs 7.0/6.5bn, +29/30% YoY; while for FY19TD the company has recorded NBP/APE growth of 13% each. SBILIFE continues to report volatile monthly nos.

IPRU on the other hand printed Individual NBP/APE of Rs 8.3/6.9bn i.e. +12/8% for Feb-19, while FY19TD reported NBP/APE growth was -5/-7%. Calculated APE for IPRU is lower on account of the monthly payment ULIP product. Based on company release IPRU’s Feb-19 RWRP grew 8.5% YoY, stable vs. +8.9% in Jan-19.

HDFCLIFE reported Feb-19 Individual NBP of Rs 6.7bn (7% YoY) while APE decreased by 6% YoY, indicating high growth in annuity and single premium products.

MAXL reported an NBP of Rs 4.9bn (+25% YoY). Growth has picked up significantly after a lean period in Nov and Dec-18 where growth was only 11% and 7% respectively. Max life should close the year with growth of ~18-20% YoY.

Amongst the other private insurers both TATA AIA and Birla Sun Life continue to display strong growth

on account of distribution partnership with HDFC Bank, as Feb-19 NBP grew 74% (YTDFY19 at 67%) and 54% (YTDFY19 at 76%) respectively.

FY19TD Individual NBP and market-share FY19TD LIC’s market share reduced by 455bps to

~52% while NBP reduced 4% to Rs 427bn.

HDFCLIFE FY19TD NBP at Rs 64.4bn grew 36% YoY. FY19TD Market share is at 17%, +243bps.

IPRU NBP premium declined 5% YoY to Rs 70.6bn consequently market share dropped by ~394bps to ~18%.

MAXL NBP at Rs 37.4bn +20% YoY; FY19TD Market share was at 10%, +35bps.

SBILIFE NBP at Rs 83.7bn grew 13% YoY, market share dropped ~51bps to ~22%.

Note: Private insurers market-share is calculated excluding LIC.

Group Business

In the group business HDFCLIFE NBP de-grew by 9% YoY, while IPRU, MAXL and SBILIFE reported growth of 434%, 10% and 110% respectively.

Driven by partnerships, IPRU has been growing at a fast rate during FY19TD.

SBILIFE continues to show high growth as it changed its credit protect policy from 5 yr regular pay to single premium.

View After two strong years of 26% YoY growth each in

NBP for private life insurers, FY19E private insurers Ind. APE growth is expected to moderate to ~8-10%. Our top pick in the sector is SBILIFE with TP of Rs 750.

Private insurance industry growth continued in Feb-19 as Total NBP/APE grew 17/15% YoY SBI life surprised with Individual NBP growth of 29% in Feb-19. Birla SL and TATA AIA have shown impressive growth largely due to tie up with HDFC Bank.

INSURANCE/AMC/BROKING TRACKER

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Private sector Individual NPB growth was 19% in Feb-19.

NBP (Rs bn) Individual Group Total YTD - Individual YTD - Group YTD - Total

Feb-19 YOY (%) Feb-19 YOY (%) Feb-19 YOY (%) FY19TD YOY (%) FY19TD YOY (%) FY19TD YOY (%) Aditya Birla Sun Life 1.6 54 0.7 -20 2.2 22 15.1 76 18.2 55 33.2 64 Bajaj Allianz Life 1.6 32 1.7 -31 3.3 -11 14.0 16 23.4 3 37.4 7 Bharti Axa Life 0.6 24 0.2 -36 0.8 -1 5.3 49 2.4 6 7.7 32 DHFL Pramerica Life 0.2 -51 0.5 -52 0.7 -52 2.9 -3 8.5 -13 11.4 -10 HDFC Standard Life 6.7 7 5.2 -9 11.8 -1 64.4 36 59.8 31 124.2 34 ICICI Prudential Life 8.3 12 2.1 434 10.4 33 70.6 -5 17.4 166 88.0 9 IDBI Federal Life 0.8 19 0.1 98 0.9 26 5.6 -8 1.4 68 6.9 1 Kotak Mahindra Life 2.3 5 1.7 33 4.0 15 15.6 8 15.2 21 30.8 14 Max Life 4.9 25 0.4 10 5.3 24 37.4 20 3.6 15 40.9 20 PNB Met Life 1.2 11 0.2 143 1.5 22 11.3 10 1.9 47 13.2 14 SBI Life 7.0 29 3.6 110 10.6 49 83.7 13 35.0 94 118.7 29 Tata AIA Life 2.4 74 0.1 42 2.4 73 17.8 67 1.0 41 18.8 65 Private players Total 43 19 19 14 62 17 387 16 213 38 600 23 LIC 44 17 77 62 121 42 427 -4 747 5 1,174 1 Industry total 87 18 95 49 182 33 815 5 959 10 1,774 8 Source: IRDAI, HDFC sec Inst Research NBP Market Share: Private players gaining market share

Particulars Individual Group Total YTD - Individual YTD - Group YTD – Total

Feb-19 YOY (bps) Feb-19 YOY (bps) Feb-19 YOY (bps) FY19TD YOY (bps) FY19TD YOY (bps) FY19TD YOY (bps) Aditya Birla Sun Life 4 84 3 -643 4 13 4 133 9 97 6 -113 Bajaj Allianz Life 4 36 9 70 5 -168 4 1 11 -375 6 -167 Bharti Axa Life 1 6 1 1 1 -24 1 30 1 -34 1 27 DHFL Pramerica Life 0 -56 3 -75 1 -151 1 -15 4 -230 2 241 HDFC Standard Life 16 -175 27 -114 19 -344 17 243 28 -133 21 869 ICICI Prudential Life 19 -115 11 77 17 201 18 -394 8 394 15 -346 IDBI Federal Life 2 0 1 -35 1 10 1 -37 1 12 1 28 Kotak Mahindra Life 5 -71 9 205 7 -11 4 -27 7 -102 5 234 Max Life 11 56 2 26 9 45 10 35 2 -33 7 176 PNB Met Life 3 -20 1 14 2 9 3 -16 1 6 2 57 SBI Life 16 133 19 375 17 363 22 -51 16 480 20 -41 Tata AIA Life 6 177 0 -15 4 128 5 141 0 1 3 -106 Private players* 49 30 20 -616 34 -444 48 455 22 439 34 413 LIC* 51 -30 80 616 78 444 52 -455 78 -439 66 -413 Industry 100 0 100 0 100 0 100 0 100 0 100 0 * LIC, Total private players market share on total market share basis while individual insurers on private market share basis Source: IRDAI, HDFC sec Inst Research

Among top insurance companies, HDFC Life’s FY19TD Individual NBP growth has been the best at 36% for FY19TD. After a slow Jan-19, growth returned in SBILIFE to 29% YoY. HDFC Life has shown improvement in market share of 243bps to ~17% during 11MFY19. SBILIFE continues to hold on to share of ~22% despite high base. LIC lost market share to private players to the tune of ~413 bps on YTD basis.

INSURANCE/AMC/BROKING TRACKER

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Private sector Individual APE growth was 16% in Feb-19

( Rs bn) Individual Group Total YTD - Individual YTD - Group YTD – Total

Feb-19 YOY (%) Feb-19 YOY (%) Feb-19 YOY (%) FY19TD YOY (%) FY19TD YOY (%) FY19TD YOY (%) Aditya Birla Sun Life 1.5 60 0.1 -79 1.6 13 14.2 78 2.1 -7 16.3 59 Bajaj Allianz Life 1.5 33 0.2 -31 1.7 21 13.6 17 2.3 1 15.9 14 Bharti Axa Life 0.5 15 0.0 -36 0.5 11 4.9 41 0.2 6 5.1 39 DHFL Pramerica Life 0.2 -42 0.0 -52 0.2 -45 2.7 3 0.9 -13 3.6 -1 HDFC Standard Life 4.1 -6 0.5 -9 4.7 -6 41.8 6 6.0 31 47.7 9 ICICI Prudential Life 6.9 8 0.2 434 7.1 11 61.6 -7 1.7 166 63.3 -6 IDBI Federal Life 0.4 14 0.0 72 0.4 15 3.8 4 0.1 65 4.0 5 Kotak Mahindra Life 1.7 -1 0.2 27 1.9 1 12.3 4 1.7 -35 14.0 -3 Max Life 4.1 27 0.0 10 4.2 27 30.2 22 0.4 -1 30.5 22 PNB Met Life 1.2 12 0.0 132 1.2 13 11.1 11 0.2 1 11.3 11 SBI Life 6.5 30 0.4 28 6.9 30 77.7 13 3.7 7 81.4 13 Tata AIA Life 2.1 52 0.0 -52 2.1 49 17.1 62 0.7 5 17.9 58 Private players total 35.8 16 2.4 -3 38.2 15 332.5 12 23.9 7 356.4 11 LIC 25.1 7 12.2 123 37.3 29 240.2 6 84.7 -4 324.9 3 Industry total 60.9 12 14.6 84 75.5 21 572.6 9 108.7 -2 681.3 7 Source: IRDAI, HDFC sec Inst Research Recent Individual NBP growth trend (%) Apr18 May18 Jun18 Jul18 Aug18 Sep18 Oct18 Nov18 Dec18 Jan19 Feb19 HDFC Standard Life 117.4 51.4 35.9 41.7 50.0 46.7 64.3 9.0 27.6 24.9 6.8 ICICI Prudential Life (24.8) (25.2) (5.3) 5.3 9.9 2.5 (14.3) (24.3) (4.2) 10.6 12.2 SBI Life (10.7) 26.3 9.2 6.6 10.2 22.8 16.6 9.3 22.3 (0.1) 29.4 Max Life 2.7 18.0 17.8 35.2 20.1 25.0 24.9 11.1 6.6 33.0 25.0 Total Private players 6.0 10.4 12.2 18.0 22.6 22.4 19.8 2.0 17.3 16.7 18.8 LIC 8.5 21.6 (11.8) (5.3) (14.0) (2.7) (5.0) (48.8) 46.7 26.6 17.4 Total Industry 7.3 16.5 (1.8) 4.7 0.5 8.0 4.5 (34.2) 29.9 21.6 18.1 Source: IRDAI, HDFC sec Inst Research

Individual APE declined 7% for IPRU for FY19TD. Individual NBP growth has been most impressive for SBI Life during Feb-19.

INSURANCE/AMC/BROKING TRACKER

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Industry over the years

Particulars Individual NBP (Rs bn) Growth YoY (%) Market Share (%)

FY15 FY16 FY17 FY18 FY19TD FY15 FY16 FY17 FY18 FY19TD FY15 FY16 FY17 FY18 FY19TD Aditya Birla Sun Life 7.7 7.1 9.6 11.5 15.1 (12.9) (6.9) 34.9 19.9 76.2 3.4 2.8 3.0 2.9 3.9 Bajaj Allianz Life 10.6 8.9 10.7 14.6 14.0 (10.3) (15.7) 19.6 36.6 16.1 4.7 3.5 3.3 3.6 3.6 Bharti Axa Life 3.5 3.6 4.0 4.7 5.3 20.0 2.5 11.2 16.0 48.9 1.6 1.4 1.3 1.2 1.4 DHFL Pramerica Life 1.4 1.8 2.2 3.6 2.9 27.5 27.2 22.0 66.9 (3.5) 0.6 0.7 0.7 0.9 0.7 HDFC Standard Life 33.1 36.6 42.0 59.4 64.4 29.8 10.4 14.8 41.5 35.6 14.7 14.3 13.1 14.7 16.6 ICICI Prudential Life 48.2 53.6 69.8 84.0 70.6 40.4 11.1 30.3 20.4 (4.8) 21.4 21.0 21.7 20.8 18.2 IDBI Federal Life 3.5 4.9 6.3 7.3 5.6 14.6 40.3 30.0 15.5 (8.1) 1.5 1.9 2.0 1.8 1.4 Kotak Mahindra Life 7.5 10.6 14.4 19.7 15.6 16.5 42.0 35.1 37.3 8.4 3.3 4.2 4.5 4.9 4.0 Max Life 23.6 26.1 33.1 39.8 37.4 14.5 10.6 26.6 20.4 20.1 10.5 10.3 10.3 9.9 9.6 PNB Met Life 7.2 9.2 10.3 12.5 11.3 23.8 28.7 11.6 21.5 9.8 3.2 3.6 3.2 3.1 2.9 SBI Life 37.6 49.8 64.7 84.1 83.7 16.7 32.5 30.0 29.9 13.0 16.6 19.5 20.2 20.8 21.6 Tata AIA Life 2.4 6.1 10.5 14.0 17.8 (12.6) 160.6 71.3 33.4 67.0 1.0 2.4 3.3 3.5 4.6 Private players total * 225.9 254.9 320.9 403.6 387.2 17.7 12.9 25.9 25.8 15.7 40.8 43.7 41.3 43.8 47.5 LIC* 327.9 327.9 455.9 517.4 427.5 (21.5) 0.0 39.0 13.5 (3.7) 59.2 56.3 58.7 56.2 52.5 Industry total 553.7 582.8 776.8 921.1 814.7 (9.2) 5.3 33.3 18.6 4.7 100.0 100.0 100.0 100.0 100.0 Note: * LIC, Total private players market share on total market share basis while individual insurers on private market share basis Source: IRDAI, HDFC sec Inst Research

INSURANCE/AMC/BROKING TRACKER

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Mutual fund flows While SIP inflows sustained at Rs 81bn despite volatile markets, lump-sum redemptions of Rs 40bn led to equity (ex. arbitrage and ETF) net inflows declining to Rs 40bn in Feb-19 (vs. FY19TD monthly average of Rs 100bn). Net inflows are lowest in the last 32 months. Overall we expect equity net inflows of ~Rs 1.2tn in FY19E. On the fixed income side, after a blip in January (inflows of Rs 21bn), debt funds continue to witness net outflows. Outflows were Rs 42bn in Feb-19 whereas FYTD aggregate outflows are Rs 1.35tn while liquid funds face outflows of Rs 245bn in Feb-19.

Equity

Due to continued weakness in equity markets, lump-sum equity inflows were negative for the third consecutive month. Monthly equity (ex. arbitrage and ETF) lump-sum outflows were Rs 40bn as against outflows of Rs 29bn in Jan-19. FY19TD lump sum inflows are down 86% YoY from Rs 1.87tn (FY18TD) to Rs 0.25tn.

SIPs held steady at Rs 81bn in Feb-19 (+0.4% MoM, avg. FY19TD Rs 77bn). SIPs inflows have been strong all though out the year, FY19TD SIP inflows are up 41% YoY to Rs 846bn.

Flows into ETFs surprised us positively as inflows were Rs 52bn in Feb-19 (FY19TD average of Rs 30bn). Recall that Bharat 22 ETF by ICICI Pru MF was open for subscription during February.

Outflows from arbitrage schemes continued at Rs 5bn in Feb-19 as against 11bn in Jan-19.

Total equity net inflows (includes arbitrage and ETF) amounted to Rs 86bn in Feb-19 (vs. FY19TD avg. of Rs 127bn/month).

Debt/Liquid After a blip in January (inflows for first time in 9

months) where inflows were Rs 21bn, outflows from debt schemes continue in February as outflows were Rs 42bn. FY19TD average outflows were Rs 123bn, whereas FY19TD total outflows have been Rs 1.35tn.

Liquid schemes recorded outflows of Rs 245bn during Feb-19. This also comes on the back of lower than expected inflows of Rs 586bn during Jan-19.

View Recent turmoil in debt markets (papers of DHFL,

IL&FS and promoter financing to Essel group promoters, ADAG promoters and companies), especially if it spreads may have further negative impact on flows to all asset classes. This remains a key risk to watch out for.

While we expect near-term lump sum equity inflows to remain weak due to tepid market conditions and upcoming general elections, SIPs are expected to support equity flows. Overall we expect equity net inflows of ~Rs 1.2tn in FY19E.

We cover RNAM in the space and have a BUY rating with a TP of Rs 200. We cover RNAM in the space and have a BUY rating with a TP of Rs 200. TP does not factor in removal of promoter overhang, which will play out as and when RCAP exits RNAM. This will result in our TP increasing to Rs 230-250 i.e. 5.2-5.7% of FY20E AUM.

We have a NEUTRAL on MOFS with a TP of Rs 611. While we are constructive on MOFS and expect FY19E-21E revenue/PAT (ex-Aspire) to grow at 11.9/28.9% CAGR, with improving mix quality, we remain watchful of cyclical recovery and repair at Aspire.

Overall we expect equity net inflows of ~Rs 1.2tn in FY19E.

INSURANCE/AMC/BROKING TRACKER

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Equity inflows Monthly equity inflow trajectory

Source: AMFI, HDFC sec Inst Research Source: AMFI, HDFC sec Inst Research

Slowing equity AUM growth FY19TD : Equity M2M impact of Rs -787bn

Source: AMFI ,HDFC sec Inst Research Source: AMFI,HDFC sec Inst Research

As net inflows picked up meaningfully from FY14, industry equity AUM grew more than 4x during FY14-18. Monthly equity inflows have been largely supported by SIP inflows.

16

8 62

47

41

15

(118

)5

(144

) 203

809 93

8 1,02

8 2,

608

1,10

3

(500)

-

500

1,000

1,500

2,000

2,500

3,000

Dec-

04De

c-05

Dec-

06De

c-07

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

YTD1

9

Net Inflows(Rs bn)

213

134 14

7

140

111

97 11

0 119 13

1

86

67

52

40

-

50

100

150

200

250

Feb-

18

Mar

-18

Apr-

18

May

-18

Jun-

18

Jul-1

8

Aug-

18

Sep-

18

Oct

-18

Nov

-18

Dec-

18

Jan-

19

Feb-

19

Inflows (Rs bn)

9,51

3 9,

219

9,25

4 9,

191

9,05

6 9,

528

9,91

7 9,

245

9,16

6 9,

489

9,66

1 9,

494

9,46

1

(10.0)

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

8,600

8,800

9,000

9,200

9,400

9,600

9,800

10,000

Feb-

18M

ar-1

8Ap

r-18

May

-18

Jun-

18Ju

l-18

Aug-

18Se

p-18

Oct

-18

Nov

-18

Dec-

18Ja

n-19

Feb-

19

AUM (Rs bn) Growth YoY (%) - RHS

(330

)

(428

)

(112

)

(203

)

(247

)

374

279

(791

)

(210

)

237

105

(219

) (74)

(1,000)

(800)

(600)

(400)

(200)

-

200

400

600

Feb-

18

Mar

-18

Apr-

18

May

-18

Jun-

18

Jul-1

8

Aug-

18

Sep-

18

Oct

-18

Nov

-18

Dec-

18

Jan-

19

Feb-

19

M2M (Rs bn)

INSURANCE/AMC/BROKING TRACKER

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SIP supporting total equity flows

Note: Arbitrage funds inflows data is available beginning Apr-18. Prior to Apr-18 the same has been clubbed in equity. Source: AMFI,HDFC sec Inst Research Lump sum inflows have dried up

Note: Arbitrage funds inflows data is available beginning Apr-18. Prior to Apr-18 the same has been clubbed in equity. Source: AMFI,HDFC sec Inst Research

(32) (40) (36)205 189 328 396 600

846 532

1,874

255

(500)

-

500

1,000

1,500

2,000

2,500

3,000

YTD17 YTD18 YTD19

Arbitrage Gold ETF/FoFETF ex. gold and FoF SIP InflowsLump sum equity Flows

Rs bn

Arbitrage funds have seen net outflows for the third consecutive month. Outflows were Rs 5bn in Feb-19 as against Rs 11bn in Jan-19. Lump sum flows have dried up (-86% YoY) due to tepid market conditions whereas SIP flows have grown at an impressive rate of 41% YoY.

64 71 67 73 76 76 77 77 80 80 80 81 81 - - - 12 7

(14)

11

(25)

1 22 24

(22) (11)(17) (5) (5) (5) (5) (4)(3)

(10)(2)

1

(0)(1) (2)

10 51

3 27

83

(40)

18 24 28 16

109

7 52

149 63

80

67

36

22

33 42 52 6

(14) (29) (40)

(100)

(50)

-

50

100

150

200

250

Feb-

18

Mar

-18

Apr-

18

May

-18

Jun-

18

Jul-1

8

Aug-

18

Sep-

18

Oct

-18

Nov

-18

Dec-

18

Jan -

19

Feb-

19

SIP Inflows Arbitrage Gold ETF/FoF ETF ex. gold and FoF Lump sum equity Flows

Rs bn

INSURANCE/AMC/BROKING TRACKER

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Debt schemes face heat Debt : Falling AUM and growth rate

Source: AMFI,HDFC sec Inst Research

Source: AMFI,HDFC sec Inst Research

Liquid funds ETFs attracting flows

Source: AMFI,HDFC sec Inst Research

Source: AMFI,HDFC sec Inst Research

10

51

3 27 83

(40)

18

24

28

16 10

9

7 52

698

729 77

5

813 88

1

898 94

4

904

895 94

9 1,07

4

1,07

3

1,13

4

(200)

-

200

400

600

800

1,000

1,200

Feb-

18

Mar

-18

Apr-

18

May

-18

Jun-

18

Jul-1

8

Aug-

18

Sep-

18

Oct

-18

Nov

-18

Dec-

18

Jan-

19

Feb-

19

Inflows (Rs bn) AUM (Rs bn)

8,05

6

7,99

4

8,03

4

7,97

5

7,72

9

7,71

4

7,69

3

7,33

7

6,99

6

7,00

2

7,02

7

7,08

3

7,06

5

(25.0)

(20.0)

(15.0)

(10.0)

(5.0)

-

5.0

10.0

6,400

6,800

7,200

7,600

8,000

8,400

Feb-

18

Mar

-18

Apr-

18

May

-18

Jun-

18

Jul-1

8

Aug-

18

Sep-

18

Oct

-18

Nov

-18

Dec-

18

Jan-

19

Feb-

19

AUM (Rs bn) Growth YoY (%) - RHS As interest rates remained elevated during most time of FY19, debt schemes faced outflows of Rs 1.3tn. Share of ETFs in total AUM have increased from 1.6% in FY14 to 4.8% as of Jan-19. Liquid funds generally see inflows in the first month of quarter.

(97)

(137

)

52

(203

)(2

31)

(80) (65)

(325

)

(376

)(3

76)

(34)

21

(42)

(400)(350)(300)(250)(200)(150)(100)

(50)-50

100

Feb-

18

Mar

-18

Apr-

18

May

-18

Jun-

18

Jul-1

8

Aug-

18

Sep-

18

Oct

-18

Nov

-18

Dec-

18

Jan-

19

Feb-

19

Inflows (Rs bn)

3,87

3

3,35

5 4,56

7

3,98

3

4,57

8

4,28

6 6,04

3

3,94

8

4,54

4 5,93

5

4,46

2

5,09

2

4,88

0

12

(550

)

1,16

5

(467

)

521

(311

)

1,71

1

(2,1

11)

553 1,

361

(1,4

89)

586

(245

)

(3,000)(2,000)(1,000)

-1,000 2,000 3,000 4,000 5,000 6,000 7,000

Feb-

18

Mar

-18

Apr-

18

May

-18

Jun-

18

Jul-1

8

Aug-

18

Sep-

18

Oct

-18

Nov

-18

Dec-

18

Jan-

19

Feb-

19

AUM (Rs bn) Inflows (Rs bn)

INSURANCE/AMC/BROKING TRACKER

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Broking Volatility drove market ADTVs (ex-prop) 21.3/-0.9% YoY/MoM higher to Rs 6.3tn in Feb-19. While ADTV growth remains robust, cash ADTV (higher yielding) growth continues to remain soft. Consequentially Cash : F&O mix is 4:96 in Feb-19 as against 6:94 in Feb-18. Share of F&O in the mix has increased to 95.9% +150/-40bps YoY/MoM.

Key takes:

For the past four months Cash ADTV has been declining. FYTD growth in Cash ADTV (ex-prop) is -1% YoY whereas derivatives ADTV (ex-prop) grew 58% YoY.

Delivery volumes have come down from 30.4% in FY18 to 25.9% in FYTD. This has contributed to fall in yields for most brokerages as yields on delivery are higher.

Also share of F&O in the overall mix has been consistently rising. F&O in the mix has increased from 91.8% in FY17 to 95.9 in Feb-19.

We continue to remain cautious on brokers as yields are expected to remain under pressure with the continued rise of discount brokers and change in vol mix in favor of lower yielding F&O.

Amongst brokers, we cover ISEC and have a NEUTRAL on the company with TP of Rs 298.

Rising share of derivates ADTV (includes prop) Falling delivery volumes

Source: AMFI,HDFC sec Inst Research Note: FY17 onwards product mix share is on ex prop basis.

Source: AMFI,HDFC sec Inst Research

Cash ADTV de grew by 11.5% YoY whereas derivatives ADTV grew by 23.3 % YoY in Feb-19. Rising share of F&O in the mix and fall in share of delivery based volumes have contributed to fall in blended yields for most brokerages. Cash delivery volumes on NSE during Feb-19 was 24.3% (-230/+320 bps YoY/MoM)

32.6 32.9 51.6 49.7 60.5 83.2 72.5

30.7

%

31.8

%

32.3

%

31.6

%

33.8

%

30.4

%

25.9

%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

-10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0

FY13

FY14

FY15

FY16

FY17

FY18

FYTD

19

Cash Turnover (in tn) Delivery (%) - RHS

16.4 16.1 15.4 16.7 15.6 11.9 9.1

75.9 77.4 78.3 76.6 79.5 84.2 88.1

7.7 6.6 6.4 6.7 5.0 3.9 2.7

-

20.0

40.0

60.0

80.0

100.0

FY13

FY14

FY15

FY16

FY17

FY18

FYTD

19

Futures (%) Options (%) Cash (%)

INSURANCE/AMC/BROKING TRACKER

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INSURANCE/AMC/BROKING TRACKER

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