Mehta Equities has come out with its report on HDFC Asset Management Company. The research firm has recommended to "Subscribe" the IPO in its research report as on July 24, 2018.
HDFC Asset Management Company Ltd (HDFC AMC) is one of India’s leading & largest AMC (in equity-oriented AUM). HDFC AMC operates in India with a joint venture between Housing Development
Finance Corporation Limited (“HDFC”) and Standard Life Investments Limited. Since inception HDFC AMC is the most profitable asset management company in India in terms of net profits since Fiscal 2013 with a total AUM of Rs.2,91,985 crore as of March 31, 2018. It offers a large suite of savings and investment products across asset classes, which provide income and wealth creation opportunities to their customers. HDFC AMC also provides portfolio management and segregated account services to HNIs, family offices, trusts, domestic corporates and provident funds etc. As of March 31, 2018, their market share of total AUM was 13.7% and of actively managed equity-oriented AUM (which excludes index linked and arbitrage schemes) was 16.8% among all asset management companies in India, according to CRISIL.
Valuation and Outlook
We believe Investors are getting best opportunity to invest in the industry leader at a reasonable price. Assuming Indian Mutual Fund Industry is in focus and expecting higher inflows going forward and with low penetration levels will support growth in AMC business in the long run. Considering the higher concentration level of equity assets in the AUM, most profitable AMC label and the parent brand name association, IPO offer price seems to be justified. On valuation perse HDFCAMC is available at 32x PE with 40%+ ROE for last 15 years and expect the similar growth in next few years. We accept that HDFC AMC would report better growth performance in the long run and will match up to its listed groupcompanies performance. Hence we recommend investors to “SUBSCRIBE” the issue with a view of making long term wealth.
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