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Aditya Birla Sun Life AMC IPO

Add to Calendar 2021-09-29 12:00 AM 2021-10-01 12:00 AM Asia/Kolkata Aditya Birla Sun Life AMC IPO Aditya Birla Sun Life AMC India

Aditya Birla Sun Life AMC IPO

Issue Details

Dates: 29 September to 1 October, 2021

Price Band: Rs. 695 to Rs. 712 per share

Minimum Lot: 20 shares

Minimum Application Amount: Rs. 13,900 to Rs. 14,240  

Total Issue Size: Up to Rs. 2,768 crores (OFS Rs. 2,768 crores)

 

Objects of the offer

The objects of the offer are to achieve the benefits of listing the equity shares on the stock exchanges and carry out the Offer for Sale of up to 38,880,000 equity shares by the selling shareholders. Further, the company expects that the proposed listing of its equity shares will enhance its visibility and brand image.

 

Corporate Profile & Business overview

 

Aditya Birla Sun Life AMC is the largest non-bank affiliated AMC in India by QAAUM since March 31, 2018, and among the four largest AMCs in India by QAAUM since September 30, 2011 according to CRISIL. It manages a total AUM of Rs. 2,93,642 crores under its suite of mutual funds (excluding domestic FoFs), portfolio management services, offshore and real estate offerings as of June 30, 2021. The company is currently set up as a joint venture between Aditya Birla Capital Limited and Sun Life AMC.

 

The company has built a geographically diverse pan-India distribution footprint with 284 locations in 27 states and six union territories. As of June 30, 2021, its distribution network was vast and multi-channelled with a substantial physical and digital presence which comprises of over 66,000 KYD-compliant MFDs, over 240 national distributors, and over 100 banks/financial intermediaries.

 

The AMC managed 118 schemes comprising 37 equity schemes (including diversified, tax saving, hybrid and sector schemes), 68 debt schemes (including, ultra-short-duration, short-duration and fixed-maturity schemes), two liquid schemes, five ETFs and six domestics FoFs, as of June 30, 2021. Further, its flagship schemes include Aditya Birla Sun Life Frontline Equity Fund and Aditya Birla Sun Life Corporate Bond Fund, both of which have grown to become leading funds in India under the company’s management.

 

 

Financials

Particular (Rs. Crs)Q1FY22FY21FY20FY19
Revenue from Operations333.241,191.031,233.841,406.07
EBITDA216.2738.89702.69683.9
EBITDA Margin (%)64.80%62.03%56.95%48.63%
PAT (from continuing operations)154.94526.28494.2446.8
ROE (%)8.60%30.87%37.54%36.61%
Equity Oriented QAAUM1,02,67896,93487,55989,062
Closing AUM2,93,6422,70,7512,15,2702,55,615


The company has witnessed a decline in revenue from operations in the past three years however it has been able to grow its PAT year-on-year. This surge in profits is attributed to declining fees and commission expenses from time to time. Further, the AMC's ability to charge an additional 30 bps in expense ratios in B-30 locations reduces pressure on scheme margins.

 

Equity oriented QAAUM has grown at a CAGR of 4.33% from FY19-FY21 and has further grown by 5.9% in Q1FY22.



Strengths


Since March 31, 2018, the company has been the largest non-bank affiliated AMC in India by QAAUM, and has been one of the four largest AMCs in India by QAAUM since September 30, 2011

 

The company benefits immensely from the Aditya Birla brand’s association with trust, quality and reliability and Sun Life’s global experience in areas of fund management, distribution, products and offshore business development

 

Massive individual investor customer base expansion due to strong systematic flows and B-30 penetration will boost AUM growth

EBITDA margins have remained over 45% since the past 3 years and Return on equity has remained equal to or greater than 30% in the same period

  

Company has a diverse product portfolio backed by strong research which allows customisation to cater to the varying needs and risk profiles of investors and effectively navigate any changes in economic conditions

 

Utilizes automation and digitization initiatives primarily towards improving scale and efficiency in terms of costs  

 

The company is headed by a well-qualified and dedicated senior management team with extensive expertise and a strong grasp on the business and industry

 

Risks

 

Covid-19 pandemic still remains a key concern. Another wave or escalation of cases could result in heightened volatility in equity markets which may cause investors to avoid investment in equity schemes and reduce their investments

 

Any underperformance of investment products for which they provide asset management services might result in investor losses and have an impact on the business

Credit risks associated with its funds' debt portfolio might expose its funds to losses that can impact the company

 

Company faces significant competition from companies seeking to attract investors’ financial assets, including traditional and online brokerage firms, other mutual fund companies and financial institutions

Valuations


CompanyRoE (%) for FY21NAV per share as at March 31, 2021P/E*
Aditya Birla Sun Life AMC Limited30.87%59.1938.9x**
HDFC Asset Management Company Limited27.76%224.2851.5x
Nippon Life India Asset Management Limited21.94%50.2939.6x
UTI Asset Management Company Limited15.27%255.3128.2x





*P/E has been calculated based on the closing market price of equity shares on NSE on September 24, 2021.

**P/E has been calculated as per the upper price band of the issue

 

Aditya Birla Sun Life AMC Limited has a comfortable P/E in comparison to its peer group and the issue seems to be reasonably priced. Further, with growing geographic penetration and retail investor’s interest to invest in stock market via various investment vehicles the AMC industry’s prospects looks very positive. We recommend investors to SUBSCRIBE to this IPO.

Issue Detail

  • Issue Open: Sep 29, 2021
  • Issue Close: Oct 01, 2021
  • Issue Type: Book Built Issue IPO
  • Face Value: Rs. 5 per equity share
  • Price Band: Rs. 695 to Rs.712 per equity share
  • Bid Lot:1 Shares
  • Minimum Order Quantity:20 Shares
  • Listing At: BSE, NSE
  • Issue Size: Rs.2768.26 Cr

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