HDFC Asset Management Company (AMC) made a stellar debut on the bourses on Monday with its shares surging 65%, against the issue price of Rs 1,100 per share. The stock debuted at Rs 1,726.25 on NSE, 56% above its issue price of Rs 1,100 and ended the session at Rs 1,815.25, 65% above issue price. Post listing, the company commands a market capitalisation of Rs 38,479.15 crore.
Valuation matrix for the fund management business is a market cap to AUM ratio, which is 12.5% for the HDFC AMC as on Monday. Typically past deals in the mutual funds space in India have taken place anywhere between 5% and 7% of the AUM if equity assets are higher or 2-4% of the AUM if debt assets are higher. In November 2017, Reliance Nippon Life Asset Management got listed at Rs 295.90, 17.42% premium to its issue price of Rs 252. HDFC AMC’s IPO is the second such offer by an Indian mutual fund company after Reliance Nippon.
Milind Barve, MD of HDFC AMC, told reporters after the listing that the company is focused on smaller towns regarding branches. Barve added that there is nothing specific at the moment regarding inorganic growth plans.
The AAUM of HDFC AMC for April-June quarter stood at Rs 3.06 lakh crore, while ICICI Prudential AMC stands at the top position with AAUM of Rs 3.10 lakh crore, suggests the data from Association of Mutual Funds in India (Amfi). However, HDFC AMC is the most profitable fund house in the country, and they had posted net profits of Rs 721.61 crore in the last financial year while net worth of the company stood at Rs 2,159. 68 crore as on March 31, 2018.
As of last financial year, HDFC AMC offered 133 schemes that were classified into 27 equity-oriented schemes, 98 debt schemes (including 72 fixed maturity plans (FMPs)), three liquid schemes, and five other schemes (including exchange-traded schemes and funds of fund schemes). The data from Value Research shows that HDFC Mutual Funds’ equity assets under management (AUM) stood at Rs 76,062.90 crore as on June 2018. While, AUM for hybrid and debt funds stood at Rs 79,757.93 crore and Rs 1,44,806.51 crore, respectively as on June 2018.
The initial public offering (IPO) of HDFC AMC got an enthusiastic response and was subscribed 82.94 times with investors bidding for 155.96 crore shares of the 1.88 crore shares offered to them.