HDFC AMC staff cash in on firm's stock price rise, sell shares worth crores

The employees of one of India’s largest mutual funds have cashed in on the rise in their company’s share prices. They have sold Rs 174.9 crore worth of shares in HDFC Asset Management Company (HDFC AMC) since January.

Prashant Jain, Krishan Kumar Daga, Rakesh Vyas, Sharad Mohnot and Chirag Setalvad are among those who have sold stakes, shows a Business Standard analysis of exchange announcements from January onwards.

Chief investment officer Prashant Jain has sold shares worth Rs 74.8 crore. Krishan Kumar Daga, Rakesh Vyas and Chirag Setalvad are all fund managers for the company, while deputy vice president Sharad Mohnot looks at risk management, according to monthly disclosures on the mutual fund website.

Diversification, meeting personal and charitable needs and funding of stock options are among the reasons behind the sale, according to two sources with knowledge of the matter. An email sent to the company on Tuesday went unanswered.

Most of the largest sellers still retain significant stakes in the company. Prashant Jain, who has sold the largest amount by value, has seen his stake in the company drop from 0.42 per cent to 0.28 per cent since January.  

The stock is up 117 per cent from its listing price of Rs 1100 per share to Wednesday’s closing price of Rs 2,387.4. The all-time high was Rs 3,844.

Diversification can be important when a large portion of the wealth is concentrated in just one company, said Dhirendra Kumar, chief executive officer of fund tracker Value Research.

The company had cut employee pay recently.

“Senior employees have taken a cut of 25 per cent, junior employees have taken smaller cuts and a large number of very junior employees have taken no cuts in the performance pay, but effectively we saved nearly Rs 8.5 crore to Rs 9 crore last year on performance-related pay,” said managing director Milind Barve in the July 23 earnings call.

The company’s share of mutual fund assets declined from 16.2 per cent in June 2019 to 14.3 per cent in June 2021, noted a July 24 result update from the retail arm of ICICI Securities (ICICI Direct).

“As HDFC AMC is the market leader, a faster decline of market share compared to industry pace does not bode well. Thus, market share revival remains the key focus area, going forward. However, as HDFC AMC has been able to build a strong brand franchise due to strong parentage and delivered consistent returns in the past, we remain positive on the stock,” said the report authored by research analysts Kajal Gandhi, Vishal Narnolia and Yash Batra.

The mutual fund managed assets worth Rs 3.56 trillion in the three months ending June. This made it the second largest player, behind SBI Mutual Fund’s 3.64 trillion.

The mutual fund will have completed exactly two years of listing on Thursday.