Aditya Birla Sun Life AMC IPO (Aditya Birla AMC IPO) Details
Mumbai based Aditya Birla Sun Life AMC is coming up with IPO that would open for subscription on 29th September 2021. Aditya Birla Sun Life AMC Limited is 4th largest AMC company in India offering various mutual fund schemes. Company has been generating strong margin growth in the last 3 years. Should you invest in Aditya Birla Sun Life AMC IPO? What are the risk factors in this IPO? Let me do IPO review and indicate whether investors should buy or not.
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About Aditya Birla Sun Life AMC Limited
Aditya Birla Sun Life is setup as joint venture between Aditya Birla Capital Limited and Sun Life AMC.
Company is ranked as the largest non-bank affiliated AMC in India by QAAUM. It is among the 4th largest AMCs in India since Sep-2011 according to the CRISIL Report. Company managed total AUM of Rs 2,936.42 billion under its suite of mutual fund (excluding our domestic FoFs), portfolio management services, offshore and real estate offerings, as of June 30, 2021.
Company has 118 mutual fund schemes comprising 37 equity funds, 68 debt funds, 2 liquid funds, 5 ETFs and 6 domestics FoF as of Jun-2021.
Company believe they have achieved this leadership position through its focus on consistent investment performance, extensive distribution network, brand, experienced management team and superior customer service.
Aditya Birla Sun Life AMC IPO details
| IPO Opening Date | 29-Sep-21 |
| IPO Closing Date | 01-Oct-21 |
| Issue Type | Book Built Issue IPO |
| Face Value | Rs 5 per equity share |
| IPO Price band | Rs 695 to Rs 712 per equity share |
| Lot Size | 20 Shares |
| Min Order Quantity | 20 Shares |
| Listing at | BSE and NSE |
| Issue Size | Total IPO Size: Rs 2,768.26 Crores |
| Book Running Lead Managers | Kotak Mahindra Capital, BoFA Securities, Citigroup Global Markets, Axis Capital, HDFC Securities and ICICI Securities |
Aditya Birla AMC IPO RHP Prospectus
What are Aditya Birla Sun Life AMC Limited competitive strengths?
1) Company is largest non-bank affiliated asset manager in India.
2) It is well recognized brand with experienced promoters.
3) Company has rapidly growing customer base with strong systematic flows and B-30 penetration.
4) It is well-diversified product portfolio with fund performance supported by research driven investment philosophy.
5) Company with Pan India distribution network.
6) Long Term track record of innovation and use of technology.
7) Company with franchise led by experienced and stable management and investment teams.
What are the Objects of the Offer?
Here are the objects of the IPO offer.
1) Offer for Sale (OFS) Rs 2,768.26 Crores: Aditya Birla Sun Life AMC IPO Size is Rs 2,768.26 Crores and is entirely OFS. Under OFS selling shareholders would sell the shares and company would not get any proceeds from the issue.
2) To achieve the benefits of listing the equity shares on the stock exchanges.
Who is the promoter of Aditya Birla Sun Life AMC Limited?
Aditya Birla Capital Limited (ABCL) and Sun Life (India) AMC Investments Inc. are the promoters of the company.
How is the company financial track record?
Here are the total assets, revenues and profits of the company in the last 3 years.
| Financial Year ending / Period ending (Amt in Mns) | |||
| Particulars | FY19 | FY20 | FY21 |
|---|---|---|---|
| Total Assets | 14,984.6 | 15,719.6 | 19,845.5 |
| Revenues | 14,072.5 | 12,347.7 | 12,058.4 |
| Profit After Tax | 4,467.9 | 4,944.0 | 5,262.8 |
| Profit % | 31.75% | 40.04% | 43.64% |
ABSL Shareholders quota for Aditya Birla AMC IPO
Aditya Birla Capital (ABCL) shareholders have a reservation of up to 1,944,000 equity shares in Aditya Birla AMC IPO.
Such reserved shareholders quota is for Individuals and HUFs who hold the shares of Aditya Birla Capital (ABCL) in their demat account as on 22-Sep-21.
Retail individuals are eligible if they hold at least 1 equity share of ABCL in demat as on 22-Sep-2021.
Why to invest in Aditya Birla Sun Life AMC IPO?
Here are the positive factors in this company.
1) Aditya Birla Sun Life AMC is the 4th largest AMC in India. ABSL AMC offers 118 mutual fund schemes comprising of equity funds, debt mutual funds, fund of funds, liquid funds and ETFs.
2) Company is well recognized brand and experienced promoters. The customer base in rapidly growing. It has well diversified portfolio with innovative mutual fund schemes.
3) There is increased awareness about mutual fund schemes and investors are inclined to move their savings in mutual funds. This sector is poised to good growth in coming years.
4) Company has generated strong margin growth in the last 3 years. Its margins increased from Rs 446 Crore in FY19 to Rs 526.2 Crores in FY21.
5) Company Return on Net Worth (RoNW) is highest among the listed AMCs in India. Its RoNW is 30.87% compared to HDFC AMC (27.7%), Nippon Life India AMC (21.9%) and UTI AMC (15.2%)
Risk Factors in Aditya Birla Sun Life AMC IPO
1) Its revenues are in declining mode in the last 3 years. Its revenues for FY19, FY20 and FY21 are Rs 1,407.2 Crores, 1,234.7 Crores and Rs 1,205.8 Crore respectively. Investors should always invest in consistent growing companies to get rewarded in the long run.
2) The IPO issue is 100% Offer for Sale (OFS). The issue proceeds would go to selling share holders and company would not get any money for future expansions.
3) There are new AMC companies that are lined up in India. This can pose stiff competition to company mutual fund business.
4) The extent to which Covid-19 may affect company business in the future is uncertain and cannot be predicted.
5) Company revenue and profit are largely dependent on the value and composition of the AUM of the schemes managed by them. Any adverse change can result in decline of revenue and profits.
6) Any underperformance of investment products in respect of which they provide asset management services can lead to loss of investors and it can affect the business
7) Credit risks related to debt portfolio of its funds can expose its funds to losses which can affect the business.
8) Investors should read complete risk factors indicated in the RHP of the IPO document before investing in this IPO.
Aditya Birla Sun Life AMC IPO dates for subscription, Allotment and Listing
| Offer Open | 29-Sep-21 |
| Offer close | 01-Oct-21 |
| Finalization of Allotment | 06-Oct-21 |
| Initiation of Refunds | 07-Oct-21 |
| Credit to Demat Account | 08-Oct-21 |
| IPO Shares Listing Date | 11-Oct-21 |
Is Aditya Birla AMC IPO Price is underpriced or overpriced?
Aditya Birla Sun Life AMC share price band is Rs 695 to Rs 712 per share.
1) On the upper price band of Rs 712 and last 3 years average EPS of Rs 17.44, the P/E ratio works out 41x.
2) If we take FY21 EPS of Rs 18.27, the P/E ratio works out to 39x.
3) Means company is asking IPO price in the P/E range of 39x to 41x.
3) There are listed peers like HDFC AMC trading at P/E of 51x (Highest) and UTI AMC at P/E of 30x (Lowest) and industry average P/E is 39.8x. Means company asking price of Rs 712 on upper price band at P/E of 39x to 41x is fully priced.
What is Aditya Birla Sun Life AMC IPO Grey Market Premium?
GMP is nothing but the premium at which the shares are trading in offline market. This is just an indication about IPO price as it is unorganized market.
Aditya Birla Sun Life AMC IPO GMP today is between Rs 60 to Rs 70 per share.
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Aditya Birla Sun Life AMC Limited IPO – Review and Conclusion
Is it good or bad to invest in Aditya Birla Sun Life AMC IPO?
Aditya Birla Sun Life AMC Limited is 4th largest AMC in India.
AMC sector is expected to have strong growth in the coming years.
It has shown strong margin growth in the last 3 years.
On other hand, company revenues are in declining mode. There can be stiff competition with new AMC companies that are expected to come in coming quarters.
Aditya Birla Sun Life AMC IPO price fully priced. The IPO proceeds would go to selling share holders and company would not get any proceeds from this offer.
Considering all these factors, one can invest in this IPO with medium to long term perspective. One may or may not get listing gains.
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Today, I have seen your website for the first time & found to be very useful in future
Thanks NC Jain
Really a decision making analysis.
Thanks Chinmay
Good analysis
Thank you Vaishali
Suresh ji
What would be your suggestion
If it is already fully priced
Shall we apply or not.
Ravi
Ravi, See our recommendation in last paragraph.
Excellent analysis. Keep up the good work.
Thanks Suraj.
Really very good analysis has been done to facilitate investors. Thank you.
Thanks KK. Share such articles on your FB / Twitter, which might be useful for othes too.
How to apply ABCL special quota?
When you login to your demat account and head towards IPO section, you would see ABSL AMC IPO – Retail investors and ABSL AM?C IPO (Shareholders quota or appropriate words). You can select the second one to apply for ABCL special quota
If I don’t have any shares of ABCL, I won’t be able to apply for this IPO ?
Suneeta, There is special quota (like reservation) for ABCL share holders. If you are ABCL share holder, you can apply through that quota too. Otherwise you can apply like any other retail investor
Holding ABCL
How to apply ABCL special quota?
I have 50k to invest. But don’t know where to invest. Please suggest good return schemes or shares.
Is there any advantage for existing ABC capital shareholders, are they allotted shares automatically on applying this IPO?
They are not allotted automatically. It is like reservation, however based on investors apply, they would allot pro rata basis.
An excellent analysis of the IPO, probably the best neutral analysis I have ever come across. Thanks and looking forward to more such analysis in future.
Thanks Amitava
Yes, I agree. Most detailed yet neutral analysis highlighting strengths and weakness in a proper way.
Thanks Kamalji