Article

HDFC Asset Management Company Ltd - Information Note

24 Jul 2018 Nikita Bhoota

This document summarizes a few key points related to the issue and should not be treated as a comprehensive summary. Investors are requested to refer the Red Herring Prospectus for further details regarding the issue, the issuer company and the risk factors before taking any investment decision. Please note that investment in securities is subject to risks including loss of principal amount and past performance is not indicative of future performance. Nothing herein constitutes an offer of securities for sale in any jurisdiction where it is unlawful to do so. This document is not intended to be an advertisement and does not constitute an invitation or form any part of any issue for sale or solicitation of an offer to subscribe for or purchase any securities and neither this document nor anything contained herein shall form the basis for any contract or commitment whatsoever.

Issue Opens: July 25, 2018
Issue Closes: July 27, 2018
Face Value: Rs 5
Price Band: Rs 1,095-1,100
Issue Size: ~Rs 2,800 cr
Public Offer: ~2.55 cr shares

Reservation

  1. HDFC AMC Emp-3.2lakh shares
  2. HDFC Emp- 5.6 lakh shares
  3. HDFC Shareholder-24lakh shares

Net Offer-2.22cr shares

Bid Lot- 13 Equity shares              

Issue Type- 100% Book Building

% shareholding

Pre IPO

Post IPO

Promoter

94.95

82.94

Public

5.05

17.06

Source: RHP

Company Background

HDFC Asset Management Company Ltd (HDFC AMC) has been the most profitable asset management company in India in terms of net profit since FY13, according to CRISIL. It operates as a joint venture between HDFC Ltd. and Standard Life Investments Ltd. As of March 31, 2018, (a) equity-oriented AUM and non-equity-oriented AUM constituted Rs1,49,713cr and Rs1,42,273cr respectively of its total AUM; (b) its market share of total AUM was 13.7% among all asset management companies in India, according to CRISIL.

Objects of the Issue

The offer consists of an Offer for Sale of up to 2.55cr equity shares.

Financials

Consolidated Rs Cr

FY15

FY16

FY17

FY18

Revenue from operations

1,022

1,443

1,480

1,760

Growth (%) yoy

19.1

41.1

2.6

18.9

EBITDA

591

668

704

966

EBITDA margin (%)

57.8

46.3

47.6

54.9

Reported PAT

416

478

550

722

EPS-Diluted (`)

20.3

23.6

27.1

35.0

RoNW (%)*

41.1

42.1

42.8

40.3

Source: RHP, Company, 5paisa Research, (EBITDA = Revenue from operations – Employee benefit exps – Other exps)

Key Points

  1. It has been a leader in the Indian mutual fund industry as demonstrated by its leading position across key industry metrics. It has consistently been among the top two asset management companies in India in terms of total average AUM since August, 2008, according to CRISIL. Its proportion of equity-oriented AUM to total AUM was at 51.3%, which was higher than the industry average of 43.2%, as of March 31, 2018, according to CRISIL.

  2. It offers a wide range of investment schemes across asset classes catering to various risk return profiles, many of which have recorded strong and consistent performance compared to industry benchmarks. Its diversified product mix enables it to cater specific customer requirements and reduce concentration risk. As of March 31, 2018, it served customers in over 200 cities through Pan-India network of 209 branches (and a representative office in Dubai).

Key Risk

The performance of its scheme is important to retain existing customers as well as attract new customers. The performance of its scheme is dependent on general market conditions and existing competition in the market. Poor investment performance, either on an absolute or relative basis, could impair revenue.

Research Disclaimer

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HDFC Asset Management Company Ltd - Information Note

24 Jul 2018 Nikita Bhoota

This document summarizes a few key points related to the issue and should not be treated as a comprehensive summary. Investors are requested to refer the Red Herring Prospectus for further details regarding the issue, the issuer company and the risk factors before taking any investment decision. Please note that investment in securities is subject to risks including loss of principal amount and past performance is not indicative of future performance. Nothing herein constitutes an offer of securities for sale in any jurisdiction where it is unlawful to do so. This document is not intended to be an advertisement and does not constitute an invitation or form any part of any issue for sale or solicitation of an offer to subscribe for or purchase any securities and neither this document nor anything contained herein shall form the basis for any contract or commitment whatsoever.

Issue Opens: July 25, 2018
Issue Closes: July 27, 2018
Face Value: Rs 5
Price Band: Rs 1,095-1,100
Issue Size: ~Rs 2,800 cr
Public Offer: ~2.55 cr shares

Reservation

  1. HDFC AMC Emp-3.2lakh shares
  2. HDFC Emp- 5.6 lakh shares
  3. HDFC Shareholder-24lakh shares

Net Offer-2.22cr shares

Bid Lot- 13 Equity shares              

Issue Type- 100% Book Building

% shareholding

Pre IPO

Post IPO

Promoter

94.95

82.94

Public

5.05

17.06

Source: RHP

Company Background

HDFC Asset Management Company Ltd (HDFC AMC) has been the most profitable asset management company in India in terms of net profit since FY13, according to CRISIL. It operates as a joint venture between HDFC Ltd. and Standard Life Investments Ltd. As of March 31, 2018, (a) equity-oriented AUM and non-equity-oriented AUM constituted Rs1,49,713cr and Rs1,42,273cr respectively of its total AUM; (b) its market share of total AUM was 13.7% among all asset management companies in India, according to CRISIL.

Objects of the Issue

The offer consists of an Offer for Sale of up to 2.55cr equity shares.

Financials

Consolidated Rs Cr

FY15

FY16

FY17

FY18

Revenue from operations

1,022

1,443

1,480

1,760

Growth (%) yoy

19.1

41.1

2.6

18.9

EBITDA

591

668

704

966

EBITDA margin (%)

57.8

46.3

47.6

54.9

Reported PAT

416

478

550

722

EPS-Diluted (`)

20.3

23.6

27.1

35.0

RoNW (%)*

41.1

42.1

42.8

40.3

Source: RHP, Company, 5paisa Research, (EBITDA = Revenue from operations – Employee benefit exps – Other exps)

Key Points

  1. It has been a leader in the Indian mutual fund industry as demonstrated by its leading position across key industry metrics. It has consistently been among the top two asset management companies in India in terms of total average AUM since August, 2008, according to CRISIL. Its proportion of equity-oriented AUM to total AUM was at 51.3%, which was higher than the industry average of 43.2%, as of March 31, 2018, according to CRISIL.

  2. It offers a wide range of investment schemes across asset classes catering to various risk return profiles, many of which have recorded strong and consistent performance compared to industry benchmarks. Its diversified product mix enables it to cater specific customer requirements and reduce concentration risk. As of March 31, 2018, it served customers in over 200 cities through Pan-India network of 209 branches (and a representative office in Dubai).

Key Risk

The performance of its scheme is important to retain existing customers as well as attract new customers. The performance of its scheme is dependent on general market conditions and existing competition in the market. Poor investment performance, either on an absolute or relative basis, could impair revenue.

Research Disclaimer