New Delhi: HDFC Asset Management Company (HDFC AMC) shares made a stellar debut on exchanges on Monday with its shares rising as much as 66 per cent to Rs 1,825 post listing. As of 10:07 am, HDFC AMC shares were trading at Rs 1,812.05, compared to their issue price of Rs 1,100. It is the second asset management company to hit the market after Reliance Nippon Life AMC.
Analysts were expecting a strong debut for HDFC AMC looking at the response the company got to its initial public offer that closed on July 27. HDFC AMC’s Rs 2,800-crore IPO was subscribed 83 times. The IPO received bids for over 156 crore shares against the total issue size of more than 1.88 crore shares. The category set aside for qualified institutional buyers (QIBs) was subscribed 192.26 times, non-institutional investors 195.15 times and retail investors 6.61 times
Analysts say many investors, who did not get allotment in the IPO, are buying the stock for long term holding. Despite the stock being issued at a premium valuation compared to Reliance AMC, there is huge investor interest for HDFC AMC shares. It may be noted that HDFC AMC is the most profitable AMC in the country. For FY18, its net profit as a percentage of average AUM stood at 0.26 per cent compared to 0.14-0.21 per cent for the other top five players in the industry.
HDFC Asset Management Co was established in 1999 as the asset management arm of mortgage lender HDFC. In 2001, Standard Life Investments acquired 26 per cent stake in the company.
As of March 2018, HDFC AMC had an AUM of Rs 2.92 lakh crore out of which 51 per cent was equity AUM. Over FY2013-18, its AUM has grown at a CAGR of 25.5 per cent. It is currently the second largest AMC in India with a market share of 14 per cent.For FY2018, HDFC AMC had reported a net profit of Rs 722 crore on revenues of Rs 1,760 crore. Its revenue has grown at a CAGR of 20 per cent over FY2013-17 while its average return on equity has been 42 per cent over the same period.