Date: 23-07-2018 Review Report HDFC AMC - IPO Note Our View: Subscribe IPO Financials and Key Detail: Issue Open 25 th JULY, 2018 27 th JULY, 2018 Issue Type Book Built Issue IPO Issue Size Offer for Sale of Rs. 2800.33 Cr. Face Value Equity Shares of Rs. 5 Issue Price Rs. 1095 Rs. 1100 per Equity Share Listing At Minimum Lot Size BSE, NSE 13 Equity Shares About the Company: HDFC Asset Management Company Ltd (AMC) was incorporated on December 10, 1999, and was approved to act as an Asset Management Company on July 3, 2000. It has been the largest asset management company in India in terms of equity-oriented AUM since the last quarter of Fiscal 2011 and have consistently been among the top two asset management companies in India in terms of total average AUM since the month of August 2008. HDFC AMC offer a large suite of savings and investment products across asset classes, which provide income and wealth creation opportunities.
Promoter: HDFC: HDFC carries on the business of financing by way of loans for the purchase or construction of residential houses, commercial properties and certain other purposes, in India Standard Life Investments It is engaged in the business of providing investment management services to members of Standard Life Aberdeen plc Group. SLI is part of Standard Life Aberdeen which is one of the world s largest investment companies. Financial Snapshot: Consolidated Balance Sheet (Rs. in Million) Particulars 31.03.2018 31.03.2017 31.03.2016 Liabilities : Shareholder's Funds 21599.68 14229.41 11512.22 Non Current Liabilities 7.78 8.04 150 Current Liabilities 2098.74 1758.45 2564.95 Total 23,706.20 15,995.90 14,227.17 Non-current Assets 7,496.96 2,807.65 3,033.87 Current Assets 16,209.24 13,188.25 11,193.30 Total 23,706.20 15,995.90 14,227.17 Consolidated Profit & Loss Account (Rs. in Million) Particulars 31.03.2018 31.12.2017 31.03.2016 Total Revenue 18,672.46 15,879.10 14,943.42 Earnings before interest, depreciatio and amortization 10739.55 8117.65 7193.1 Finance Cost - - - Depreciation Expense 114.40 119.64 110.60 Profit before tax and exceptional it 10,625.15 7,998.01 7,082.50 Tax Expense 3408.99 2495.55 2303.7 Profit After Tax 7,216.16 5,502.46 4,778.80
Financial Highlights: The revenue increased from 9,031.14 million in Fiscal 2014 to 18,672.46 million in Fiscal 2018, with a CAGR of 19.91%, and our net profit has grown from 3,577.70 million to 7,216.16 million during the same period at a CAGR of 19.17% Objects of the Issue: Offer for Sale: To carry out the disinvestment company has come up with 2.54Cr equity shares amounting to Rs. 2800.33 Cr. Business Profile: HDFC AMC offers diverse product and services that allows us to reach out to a large segment of the Indian mutual fund market and develop a broad individual focused customer base. As of March 31, 2018, we offered 133 schemes that were classified into 27 equity-oriented schemes, 98 debt schemes (including 72 fixed maturity plans ( FMPs )), three liquid schemes, and five other schemes (including exchange-traded schemes and funds of fund schemes). This diversified product mix provides us with the flexibility to operate successfully across various market cycles, cater to a wide range of customers from individuals to institutions, address market fluctuations, reduce concentration risk in a particular asset class and work with diverse sets of distribution partners which helps them to expand their reach. They also provide portfolio management and segregated account services, including discretionary, non-discretionary and advisory services, to high net worth individuals ( HNIs ), family offices, domestic corporates, trusts, provident funds and domestic and global institutions. The total AUM was 2,919.85 billion as of March 31, 2018. Their profits have grown every year since the first full year of operations in Fiscal 2002. They have been the largest asset management company in India in terms of equity-oriented AUM since the last quarter of Fiscal 2011 and have consistently Investment Rationale: Consistent market leadership position in the Indian mutual fund industry Trusted brand and strong parentage Strong investment performance supported by comprehensive investment philosophy and risk management Consistent profitable growth Experienced and stable management and investment teams
Key Concern: Low level of financial awareness Competition from other financial instruments Retail expansion at a reasonable cost Our View: We recommend to SUBSCRIBE the IPO of HDFC Asset Management Company Limited considering its sound track record of operational and financial performance. It is coming with a P/E of 31.4x based on FY2018 earnings.
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