Home
>
Articles
>
Aditya Birla AMC IPO: Aditya Birla AMC IPO Date, Price, News & Review

Aditya Birla AMC IPO: Aditya Birla AMC IPO Date, Price, News & Review

Last updated: 27 Sep, 2021 | 02:30 pm

Aditya Birla AMC IPO: Aditya Birla AMC IPO Date, Price, News & Review

Aditya Birla Sun Life (ABSL) AMC Limited IPO opens for subscription on 29th September. The company is looking to raise Rs Rs 2,770 crore through the public issue. Here are the details:

About the IPO

Aditya Birla Sun Life AMC IPO Date: 29 September - 1 October 2021

Aditya Birla Sun Life AMC IPO Price band: Rs 695 - Rs 712

Issue Size: Rs 2700 - 2770 Cr (Fresh Issue of ₹ 2,768.26 Crore and Offer for sale of up to 38,880,000 Equity Shares)

Post Issue Implied Market Cap: Rs 20,505.6 Cr

Reservation: QIB 50%, Retail - 35%, NII 15%

Bid lot: 20 shares, and in multiples of 20 shares

Objective of the issue

  • The company wants to achieve the benefits of listings of equity shares on the stock exchange
  • Carry out the offer for sales by selling the equity shares of shareholders

About Aditya Birla Sun Life AMC 

  • The promoters of the company are Aditya Birla Capital Limited (ABCL), and Sun Life (India) AMC Investment Inc, and the company was incorporated in 1994.
  • Aditya Birla Sun Life AMC Limited is ranked as the largest non-bank affiliated AMC in India by Quarterly Average Assets Under Management (QAAUM) since March 31, 2018. It is also among the four largest AMCs in India by QAAUM since September 30, 2011 (CRISIL).
  • As of June 30, 2021, the company has managed a total AUM of Rs 293,600 Crore under mutual fund (excluding domestic FoFs), portfolio management services, offshore and real estate offerings.
  • The company managed 118 schemes comprising 37 equity, 68 debt, 2 liquid schemes, 5 ETFs, and 6 domestic FoFs as of June 30, 2021.
  • ABSL AMC caters to a wide range of customers from individuals to institutions through its pan-India network and offering of customer solutions. It has a presence in 284 locations spread over 27 states and six union territories. 

Listed Peers

The listed peers of the company are HDFC AMC, Nippon Life AMC, and UTI AMC. SBI Life AMC and ICICI Prudential AMC MF are other large unlisted peers. Below is the comparison among listed peers:

  • In terms of revenue (FY21), HDFC AMC is the category leader with a revenue of Rs 2201.74 crore, followed by Nippon Life AMC.
  • The Earning Per Share (EPS) of ABSL is third on the list and reported at 18.27. HDFC AMC is again on top of the table with an EPS of 62.28.
  • RoNW is highest for ABSL AMC at 30.87%, followed by HDFC AMC which has a RoNW of 27.76%.
  • The P/E of ABSL looks attractive at 33, slightly higher than UTI (30.14).

Financials

  • There is a declining trend in the revenues from the past 3 years from Rs 1406 cr in FY19 to Rs 1191 cr in FY21. 
  • The Profit After Tax (PAT) has shown an increasing trend in the last three financial years. From Rs 446.80 crore in FY19, it has increased to Rs 526.28 crore in FY21. This surge in profits is attributed to declining fees and commission expenses from time to time. 
  • The EBITDA and the Net profit margins have also seen a positive trend from FY19 to FY21.
  • The revenue from fees and commission for the nine months ended December 31, 2020, FY20, and FY19 represented 86.14%,92.59%,93.92% of total income. 
  • The company has been a regular dividend-paying AMC. It has paid a dividend of 1667% (FY19), 1833% (FY20) and 777.80% (FY21) and has also paid a dividend of 49% in Q1 of FY22. It will continue its dividend policy post listing based on its financial performances and future prospects. 

USPs

Well Recognized Brand and experienced promoters - ABCL, one of the company’s promoters and shareholders, is the listed non-operating holding company of the Aditya Birla group’s financial services businesses. Sun Life is a leading international financial services organization providing insurance, wealth, and asset management solutions to individual and corporate clients. 

Growing Individual customer base - The company has been successful in growing individual investors MAAUM at a CAGR of 18.38% from March 2016 to June 2021. The company manages a portfolio of close to 30 lakh customers which represents 6.14% of the market share. 

Diversified product portfolio and research-driven investment philosophy - The company has many schemes, and several of them are performing better than the industry average. The company consistently demonstrates strength in its variety of product offerings and has a long history and track record of innovation in schemes, with certain of its schemes being the first of their kind in India. 

Use of Technology - The company has a history of innovation in the mutual fund area. It uses technology to service its investors. AMC's online engagement has shown excellent growth in recent years. Its digital transactions represented 89.10%, 87.75%, 77.01%, and 70.92% of its total transactions (excluding SIP and STP installments) for the three months ended June 30, 2021, and FY21, FY20, and FY19, respectively. Despite the pandemic, through FY21, the company onboarded over 122,000 investors through its video KYC facility.

Growth Potential 

  • The company plans to increase its geographic reach and strengthen its relationship with its distributor.
  • It is focused on delivering portfolio differentiation and sustained investment performance.
  • It will leverage its digital platforms to increase customer acquisition and enhance customer experience.
  • By developing its investment offering it plans to enhance its product portfolio in the coming years.

Risk Factors 

Value and composition of AUM - The revenue and profit of the company largely depend on the value and composition of the AUM of the schemes it manages. Most of the revenue comes from the management fees charged by the company on the assets they manage. If there are any adverse changes in the AUM, it may result in a decline in the profit of the company. Factors that could cause AUM decline include the overall decline in the Indian equity market, change in interest rates, redemptions, etc.

The underperformance of investment products - If the products of the company are not performing well, it could lead to a loss of investors, reduction in AUM, and adversely affect the results of operations and reputation of the company.

Dependency on channels - The company depends on third-party distribution channels and other intermediaries, and problems with these distribution channels and intermediaries or failure to continue to expand the current third-party distribution channels and intermediaries could adversely affect the business and financial performance of the company.

INDmoney Recommendation:

Aditya Birla Sun Life AMC’s revenue declined over the last two years, on the back of a drop in AAUM over the last 2 years. However, the company’s revenue has shown a good rebound in Q1FY22, growing by 30% over the previous year. Despite a drop in Revenue, the company was able to grow its margins and return ratios, due to a decline in expenses. 

The company’s bottomline has also increased consistently over the last 3 years. The company has reported better return ratios than its listed peers UTI, HDFC AMC and Nippon India. 

At the higher end of the price band, Aditya Birla Sun Life AMC IPO is priced at a P/E ratio of 33 times FY22 EPS (annualised on a fully diluted basis). This is lower than industry peers HDFC AMC (50 times), Nippon Life India (41 times), UTI AMC (35 times). 

Given factors such as strong growth in bottomline, growing margins, healthy return ratios, good runway for growth, and reasonable valuations, we remain positive on the prospects of the issue. 

We are a SEBI registered investement advisor