The initial public offer of Aditya Birla Sun Life AMC Limited received 56 per cent the subscription on the first day on Wednesday. The initial share sale received bids for 1,54,80,400 shares against 2,77,99,200 shares on offer, according to data available with the NSE.
The Retail Individual Investors (RIIs) category was fully subscribed (1.09 times) and non-institutional investors 14 per cent. The Initial Public Offer (IPO) is of 3,88,80,000 equity shares.
The initial share-sale is entirely an offer for sale, wherein two promoters -- Aditya Birla Capital and Sun Life (India) AMC Investments -- will divest their stake in the asset management firm.
The price range for the offer, which would conclude on October 1, is at Rs 695-712 per share.
Aditya Birla Sun Life AMC on Tuesday said it has collected Rs 789 crore from anchor investors. At the upper end of the price band, the initial share sale is expected to fetch Rs 2,768.25 crore.
The IPO consists entirely of offer for sale to achieve the benefits of listing the Equity Shares on the Stock Exchanges; to carry out the Offer for Sale of up to 38,880,000 Equity Shares by the Selling Shareholders
Key competitive strengths
It is the largest non-bank affiliated asset manager in India; well-recognized brand with experienced promoters; growing individual investor customer base driven by strong systematic flows and B-30 penetration; diverse product portfolio with fund performance supported by research-driven investment philosophy; pan-India, diversified distribution network; long-term track record of innovation and use of technology; franchise led by experienced and stable management and investment teams.
Slow revival in economic activities post-pandemic; decline or volatility in global, domestic equity markets; changes in interest rates and defaults; Unfavorable composition of AUM; intense competition; unfavorable regulation; any adverse change in AUM may result in a decline in revenue and profit; historical growth rates may not be indicative of future growth, and failure to continue with third party channel
Aditya Birla Sun Life AMC
Incorporated on September 5, 1994 and promoted by Aditya Birla Capital Limited and Sun Life AMC, Aditya Birla Sun Life Asset Management Company Limited is ranked as the largest nonbank affiliated AMC in India by QAAUM since March 31, 2018, and among the four largest AMCs in India by QAAUM since September 30, 2011.
The company managed a total AUM of Rs 2,936.42 billion under mutual fund (excluding domestic FoFs), portfolio management services, off- shore and real estate offerings, as of June 30, 2021. The company managed 118 schemes comprising 37 equity schemes (including, among others, diversified, tax saving, hybrid and sector schemes), 68 debt, 2 liquid schemes, 5 ETFs, and 6 domestic FoFs, as of June 30, 2021.
Peer comparison and valuation
With supportive government policies, financialization of household savings, increasing penetration in the B30 cities, the macros of the domestic mutual fund industry are positive and provide huge scope for growth and development.
Anand Rathi: At the upper end of the IPO price band, Aditya Birla Sun Life AMC Ltd. is offered at P/E of 39x its FY21 earnings, with a market capitalization of Rs 205,056 million. "Given that the company is the largest non-bank affiliated AMC and among the four largest AMCs in India with well-recognized promoters, growing individual investor customer base, diverse product portfolio with high RoNW of 30.87 percent in FY21, we give this IPO a "Subscribe" rating", Anand Rathi said.
BP Equities: On the valuations front, the issue is priced at P/E of 39x based on FY21 earnings, diluted equity shares and upper price band which is fairly priced when compared to its listed industry peers (i.e. HDFC AMC- 51.5x, Nippon Life AMC-39.6x, and UTI AMC-28.2x). The company is expected to benefit highly from the positive industry outlook led by the rising participation in stock markets, strong capital markets and technological progress. "Hence we give a “Subscribe” rating to this IPO", BP Equities said.
Canara Bank Securities: The company’s Market Cap/AUM stands at 6.74% as on Aug 2021 against 14.33 percent/9.97 percent/6.54 percent of HDFC AMC/ Nippon India AMC /UTI AMC, which looks attractive among listed peers considering its financial performance. Hence, "we believe that the issue can besubscribed for long-term", Canara Bank Securities said.
Choice Broking: At higher price band of Rs. 712, ABAMC is demanding a TTM P/E multiple of 35.1x (to its TTM EPS of Rs. 20.3), which is at discount to the peer average of 38.3x. Moreover, based on FY24E earnings, the stock is demanding a P/E valuation of 29.4x, which seems to be attractive for a company with a RoE excess of 25 percent. "Thus, considering the above observations, we assign a “Subscribe” rating for the issue", Choice Broking said.