New Delhi: Shares of HDFC AMC are set to list on Monday, with experts anticipating strong gains on debut. There was strong demand for the HDFC AMC IPO, which was subscribed 83 times. Reports say grey market operators expect shares of HDFC MF to list with gains of around 40%. HDFC AMC has fixed the issue price of IPO at ₹1,100. The IPO was open between 25 July and 27 July and HDFC AMC had offered 25.46 million shares in a price band of ₹1,095-1,110 apiece.
Analysts remain positive on the stock but caution on valuation.
Sanjiv Bhasin, EVP-Markets & Corp Affairs at IIFL, says that going by the huge demand the HDFC AMC IPO attracted, the stock is likely to get a good pop on listing. Both the insurance and mutual fund industries are sunshine sectors and will attract a lot of inflows in the future, he says. But he has a word of caution for those who missed out on the subscription. “The stock is not cheap and besides that, the current market valuation is also very high,” he says, adding that investors should look at the stock from a long-term view.
Going by the grey market premium, HDFC AMC shares are expected to see a strong listing, says Sharmila Joshi, an independent investment advisor. 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.”
Last year, HDFC AMC’s rival Reliance Nippon Life Asset Management Ltd raised Rs 1,542 crore in an IPO.
Gaurang Shah, head investment strategist at Geojit Financial Services, says that the asset management sector has a lot of growth potential. New investors can look at buying the stock from a long-term perspective, he added.
HDFC AMC is a joint venture between mortgage lender Housing Development Finance Corporation (HDFC) and Standard Life Investments. HDFC AMC is the second biggest fund house in the country.
T.S. Harihar, founder and chief executive officer at HRBV Client Solutions, says HDFC AMC has a strong equity franchise but the stock is already fully valued. “And on top of listing gains, as expected, the margin of safety will be very less. This could cap the short-term upside,” he said.
“At the valuation of valuation of Rs 30,000 crore the IPO values the AMC at twice the valuation of the Reliance AMC. It values the HDFC AMC at 7-8% of the AUM which is the normal valuation that an AUM gets. Upsides may be limited,” Harihar said.