HDFC AMC IPO Review, Brokerage Recommendations

By | July 24, 2018

HDFC AMC IPO Review – HDFC Asset Management Company IPO Review

We all know that the HDFC Asset Management Company is bringing its IPO from 25th July 2018 to 27th July 2018. The investors are wondering whether they should apply for this IPO or not? This is why we have decided to give you some insights about the IPO. Check the given section where you will get all information about the HDFC AMC IPO.

HDFC AMC IPO Review

Basic Details:

  • HDFC AMC is a JV between Housing Development Finance CorporationNSE 0.58 % (HDFC) and Standard Life Investments.
  • The opening date is the 25th of July 2018 and the closing date is 27th of July 2018.
  • This IPO is an offer for sale (OFS) by the existing shareholders and company will not receive any proceeds from it.
  • The price band of the IPO is Rs. 1,095- Rs. 1,100 per share with a face value of Rs. 05 per share.
  • The company wants to collect Rs. 2800 crores from this offer.
  • 2.54 crore equity shares will be offered to the investors.
  • 85.92 lakh shares will be sold by the HDFC and 1.68 crore shares by Standard Life.
  • HDFC will sell 4.08% while Standard Life will sell 7.95% stake.
  • The value of the company will be Rs. 23000 crores at the upper end of the price band.
Open Date25 Jul 2018
Close Date27 Jul 2018
Issue PriceRs. 1095 – Rs. 1100 Per Equity Share
Lot Size13 Shares
Minimum Order Quantity13 Shares

Lot Size

  • Minimum bid lot for the IPO is 13 shares and in multiples of 13 shares thereafter.
  • At the upper band of the price band, the retail applicants have to pay Rs. 14,300 per lot.

About the company

  • HDFC AMC is a joint venture between Housing Development Finance Corporation (HDFC) and Standard Life Investments.
  • It is the largest asset management company (AMC) in terms of equity-oriented AUM since 2010-11.
  • In terms of total average assets under management AUM, It is among the top two AMCs since August 2008.
  • The AUM is growing at a CAGR of 25.5% and it has a total AUM of Rs 2.91 trillion, which includes Rs 1.49 trillion equity-oriented and Rs 1.42 trillion non-equity oriented AUM.
  • It holds total industry AUM of 13.7%, and 16.8% in the actively managed equity-oriented pie.
  • It possesses 51.3% of equity-oriented AUM which has higher fee structure with 2x margins.

Key Points of the company

  • The company operates under a bigger brand name of HDFC.
  • It has high-margin equity oriented AUM.
  • The RoE of the company is consistent at 40%.
  • Its wide distribution network stands at 209 branches and a network of over 65,000 distributors all over India.
  • Strong return and higher dividend payout ratio.

Financials

DateTotal RevenueTotal ExpensesProfit after Tax
FY 2018
Rs. 1,867.2Rs. 804.7Rs. 721.6
FY 2017Rs. 1,587.9Rs. 788.1Rs. 550.2
FY 2016Rs. 1,494.3Rs. 786.1Rs. 477.9
FY 2015Rs. 1,064.3Rs. 441.7Rs. 415.5
FY 2014Rs. 903.1Rs. 380.7Rs. 357.8
FY 2013Rs. 784Rs. 337.2Rs. 318.7
**(All Figures in Rs. Crores)

Valuations

  • Earnings Per Share (EPS): Rs. 34.96
  • Price/Earnings (P/E) ratio: 31.32 – 31.46
  • Return on Net Worth (RONW): 33.41%
  • Net Asset Value (NAV): Rs. 102.58 per share.

Points to be noted

  • The company has posted a jump of 31% in net profit at Rs. 721.61 crores in FY 2017-18 from Rs. 550.24 crores in FY 2016-17.
  • Total revenue of the company has been jumped to 17.6% YOY to Rs. 1,867.24 crore in 2017-18.

Risk Factors

  • Market Fluctuations / Adverse Global Market fluctuations which also effects Indian markets.
  • Bad economic conditions.
  • The poor performance of investment products.
  • A collapse of current distribution relationships and failure to build a new distribution relationship.

Brokerage House Views

  • Motilal Oswal: Subscribe
  • Choice Broking: Subscribe
  • Angel Broking: Subscribe
  • Ajcon Global: Subscribe
  • GEPL Capital: Subscribe

Leave a Reply

Your email address will not be published. Required fields are marked *