HDFC AMC IPO: Brokerage Views and Run up to IPO

This post on HDFC AMC IPO tries to bring out consolidated brokerage views , Grey Market Premium, Subscription information. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to HDFC AMC IPO or not.

Related Posts: HDFC AMC IPO Review

Subscription: HDFC AMC IPO  ( x times)
QIB NII Retail Emp Shr Total
Day 3 192.26   195.15 6.73 1.52 2.69 83.06
Day 2   5.89   13.9 3.5 1.03 1.4 5.52
Day 1 1.19 0.55 1.34 0.54 0.6 1.03
HDFC AMC IPO: Grey Market Premium etc.

28/07/18 Grey Market Premium Rs.   Rs. 550   Kostak  Rs. 1500-1600
26/07/18 Grey Market Premium Rs.   Rs. 470   Kostak  Rs. 1700-1800

Anchor Investors

Anchor Investors (AIs) portion in the Public Issue of HDFC Asset Management Company Limited 66,53,265 equity shares have been subscribed today by 35 AIs at Rs. 1,100/- per equity shares. Some of the investors’ allotted shares include Capital, Fidelity, Blackrock and Temasek and domestic institutions like ICICI Prudential MF, Reliance MF, SBI MF and Kotak MF.

Click here for Complete HDFC AMC Anchor Investors List

Consolidated opinion of Brokerages, Analysts, Business New Paper Reports, Management Views on HDFC AMC IPO.

Angel Broking: “At the upper end of the IPO price band, it is offered at 32x
its FY2018 EPS and 11x its FY2018 book value, demanding `23,318cr market
cap, which is 7.6% of the MF AUM (`3,06,841cr for the month of June 2018).
Considering that HDFC AMC is the second largest AMC coupled with huge
potential of MF industry growth, strong return ratios, asset light business, higher
dividend payout ratio and track record of superior investment performance, we
are positive on this IPO and rate it as SUBSCRIBE”

Capital Market: ” Score 55/100, The company has consistently delivered RoE of above 40% for last five years to FY2018. Post-issue valuation is Rs 23319 crore at the upper price band of Rs 1100 per share and Rs 23213 crore at the lower price band of Rs 1095 per share. EPS for FY2018 works out to Rs 34.04 on post-IPO equity basis. The scrip is offered at P/E multiple of 32.3 times FY2018 EPS at the upper price band.”

Emkay:HDFC AMC has priced IPO at ~7.8% of total FY18 AUM (~31.5x P/FY18 earnings) with ~40% FY18 ROE. The only peer comparison is Reliance Nippon AMC (RNAM), which issued IPO at ~6.3% of FY18 AUM (~29.6x P/FY18 earnings) with 25% RoE. However, with subsequent correction in pricing, RNAM is currently trading at ~5.5% of FY18 AUM (~26.1x P/FY18 earnings). Considering its superior return ratios, a favorable AUM mix and relatively stable management profile, HDFC AMC is expected to command premium over peers. We recommend SUBSCRIBE to the IPO.”

Nirmal Bang: ” The company’s consistent market leadership position, higher mix of high-margin equity oriented AUM and consistent RoE of over 30%, which is one of the highest among domestic and global peers work in HDFC AMCs favor. We recommend “SUBSCRIBE” to the issue.

Prabhudas Liladhar : “HDFC AMC has been delivering robust capital return ratios of +40% over last few years and also has been having high dividend payout. The company isbeing valued at ~8% of FY18 AUM or 32x FY18 P/E which offers scope fordecent gains over the medium term given strong macro outlook, improving penetration of financial savings, strong distribution setup across PAN India
and strong pedigree. We recommend Subscribe to the issue for long term returns.”

SMC : “Rating 3.5/5 HDFC AMC enjoys trusted brand and strong parentage and thus has consistent market leadership position in the Indian Mutual Fund Industry. It had the highest share of net profits and total revenue of 18.8% and 13.5%, respectively, among asset management companies in India in FY17. However, a large portion of AUM is concentrated in a few schemes. The performance of these schemes has a significant impact on AUM and consequently revenue. Underperformance by any of these schemes may have a disproportionate adverse impact on the AUM and revenue.”

SP Tulsiyan website:A proxy to financialisation of savings in India, HDFC AMC is the preferred choice to ride India’s fast growing per capita income (and hence savings) story. IPO is very attractively priced and we advise all investors to go for it – even if one has a short term view (listing gains) or long term horizon (portfolio building). Simply put, HDFC AMC is a must buy for all.

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk. 

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