Aditya Birla Sun Life AMC IPO opens, check grey market premium; should you invest?

By: |
September 29, 2021 12:37 PM

Aditya Birla Sun Life AMC’s Rs 2,768-crore IPO has opened for subscription on Wednesday, 29 September 2021, at a price band of Rs 695-712 per share.

IPO, Aditya Birla Capital Sun LifeAt the upper price band of Rs 712, Aditya Birla Sun Life AMC is available at P/E of 39x (FY21) which appears reasonably priced.

Aditya Birla Sun Life AMC’s Rs 2,768-crore IPO has opened for subscription on Wednesday, 29 September 2021, at a price band of Rs 695-712 per share. So far on the first day of the bidding, the issue received 16 per cent of applications. The issue will remain open for subscription till Friday this week. In the primary market, the shares of Aditya Birla Sun Life AMC were trading at a premium of Rs 25 per share over the issue price. This has fallen by half from a premium of Rs 50 per share at the end of last week in the unlisted space. Upon listing, Aditya Birla Sun Life AMC could join the listed industry peers such as HDFC Asset Management Company, Nippon Life India Asset Management and UTI Asset Management Company.

Should you subscribes?

Geojit Financial Services
Rating: Subscribe

At the upper price band of Rs 712, Aditya Birla Sun Life AMC is available at  P/E of  39x (FY21) which appears reasonably priced. The brokerage firm has assigned subscribe rating for the issue on a long-term basis considering strong growth prospects in one of the fastest-growing economies with a highly under-penetrated MF industry.

Anand Rathi Share and Stock Brokers
Rating: Subscribe

At the upper end of the IPO price band, Aditya Birla Sun Life AMC 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% in FY21. It has given a subscribe rating. 

Religare Broking
Rating: Subscribe

Aditya Birla Sun Life AMC stands to benefit from strong industry prospects as it has a diversified product portfolio and also offers customized solutions to meet financial goals. It  has a well-recognized and experienced promoter group (Aditya Birla and Sun Life) which will support in building customer trust as well as improve SIP inflows. Further, the company plans is to improve its customer base as well as gain market share by developing more investment offerings, strengthening relationships with distributors, increasing geographical presence and improving digital platform technology. On the financial front, the company has seen consistent improvement in AUM share and overall performance has been healthy. From the long term perspective, the brokerage firm has a positive view on the company.

Choice Broking
Rating: Subscribe

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. At the higher price band of Rs 712, the IPO 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, analysts at Choice Broking said. They added that 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%. Choice Broking has a subscribe rating for the issue

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