IPO update: Aditya Birla Sun Life AMC | Value Research Find out how this asset manager has done since its listing.
IPO Analysis

IPO update: Aditya Birla Sun Life AMC

Find out how this asset manager has done since its listing.

Aditya Birla Sun Life AMC (ABSL AMC) came out with its IPO about five months ago, and you can find our detailed analysis of the issue here. In this update, we will look at the company's market performance and business performance post issue.

Our analysis of the IPO
We gave a 17 out of 28 to this asset management company. ABSL AMC is a joint venture between Aditya Birla Capital and Sun Life (India) AMC Investments Inc. As of December 31, 2021, it is the fourth largest AMC in India and the largest non-bank affiliated AMC in India by quarterly average assets under management (QAAUM). Its total AUM (as of December 31, 2021) stood at approximately Rs 2,85,800 crore. The company's distribution network covers more than 280 locations. Of these, over 80 per cent are in B-30 (beyond the top 30) cities.

Our rating of the company was based on the following:

  • Out of the 11 business metrics, the company did well on four.
  • It scored six out of six on management-quality-related metrics.
  • It did well on financial metrics with a score of six out of eight.
  • It cleared one out of three valuation-related metrics.

Stock performance since listing
The company saw a good response to its IPO, which was oversubscribed by more than five times. The qualified institutional buyers (QIB) portion was oversubscribed by 10.4 times, while the non-institutional investors' portion was oversubscribed by 4.4 times and the retail portion by more than 3 times.

ABSL AMC didn't have a great debut on the stock exchanges, with the shares listing at its issue price of Rs 712 and ending the day at Rs 700. Post listing, the stock has continued to drift downwards and reached its lowest price of Rs 490 on February 24, 2022. As of March 7, 2022, the stock is down 31.2 per cent from its issue price.

Business performance
In Q3 FY22, the revenue was Rs 334.4 crore, translating into a growth of 19.9 per cent YoY. EBITDA for the quarter stood at Rs 240.2 crore, representing a growth of 48.6 per cent YoY. Profit after tax grew by 26.9 per cent YoY to Rs 186.2 crore.

The company's mutual fund QAAUM grew 17 per cent YoY to Rs 2,98,800 crore in Q3. The equity mutual fund QAAUM increased by 39 per cent to Rs 1,22,000 crore. The share of equity in overall mutual funds assets increased from 34.3 per cent to 40.8 per cent YoY in the December quarter.

What to do now?
The company's Q3 performance has been good, but the same cannot be said for its stock. Given that higher growth is expected from B-30 cities, ABSL AMC, with its extensive distribution network in B-30 cities, will stand to benefit from this growth.

Since its listing in October, the stock has traded at a P/E between 27-39 times. It currently trades at a P/E of just over 27 times, which is less than the median P/E of its competitors of 29 times. However, given that the company is competing with not only larger bank-affiliated AMCs but also facing increasing competition from fintech players, it might be better to wait on the sidelines for a better opportunity.

Disclaimer: This analysis is not meant to serve as a recommendation. Do your research before investing in the company. If you are interested in our stock recommendations, please visit www.valueresearchstocks.com

Also read:

Aditya Birla Sun Life AMC IPO: Information Analysis

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