In handsome gains for HDFC AMC IPO investors, shares of the asset manager made a stellar debut today on both NSE and BSE, surging over 66% from the issue price. HDFC AMC shares rose to Rs 1,835 at day’s high on NSE, as compared to issue price of Rs 1,100. HDFC AMC shares opened 58.09% higher on the BSE at Rs 1,739 a piece. HDFC AMC’s Rs 2,800 crore IPO was open during July 25-27 and the price band for the offer was fixed at Rs 1,095-1,100 per share. HDFC AMC is the second asset management company to hit the market after Reliance Nippon Life AMC, which had raised Rs 1,542 crore last year. HDFC AMC had offered 25.46 million shares and the issue had generated huge interest among investors. It was subscribed 83 times.
At 11.45 am, HDFC AMC shares were trading 64% higher at Rs 1,807 on NSE. This gives HDFC AMC a market capitalisation of over Rs 38,000 crore.
HDFC AMC is a joint venture between Housing Development Finance Corporation (HDFC) and Standard Life Investments. Many brokerages were optimistic about HDFC AMC IPO, citing the asset manager’s strong parentage (HDFC group company), its large distribution network and attractive returns.
HDFC AMC is the second-biggest mutual fund manager in the country with Rs 3.07 trillion worth of assets under management in the June quarter. HDFC AMC is however the most profitable asset manager in the country, due to its higher share of equity assets and focus on the retail segment.
Many analysts say that the financial sectors such as insurance and mutual funds will benefit as more and more Indians moving away from traditional investments such as gold and real estate.
Sanjiv Bhasin, EVP-Markets & Corp Affairs at IIFL, remains positive on the stock but advises caution for fresh investors.
Both the insurance and mutual fund industries are sunshine sectors and will attract a lot of inflows in the future, he says. But HDFC AMC shares, he adds, are not cheap and besides that, the current market valuation is also very high.
Investors should look at the stock from a long-term view, Bhasin says.
Independent investment advisor Sharmila Joshi also advises caution for fresh investors. “Though shares of HDFC AMC have good long-term potential, I don’t want to be part of the first-day frenzy and buy the share at a fancy price. Instead, I would be looking at shares of HDFC, which will offer me exposure to diverse businesses, such as banking, insurance, asset management and mortgage financing,” she says.
T.S. Harihar, founder and chief executive officer at HRBV Client Solutions, says further upsides in the short term could be limited. “Though HDFC AMC has a strong equity franchise the stock is already fully valued,” he says.
Kotak Mahindra Capital Company, Axis Capital, DSP Merrill Lynch, Citigroup Global Markets India, CLSA India, HDFC Bank, ICICI Securities, IIFL Holdings, JM Financial, J P Morgan India, Morgan Stanley India and Nomura Financial Advisory managed the company’s IPO.
