Professional Documents
Culture Documents
HDFC AMC Project
HDFC AMC Project
COMPANY IPO
Assignment File
An Initial Public Offering facilitates the company to achieve its goal of growth
and expansion by providing company ownership to the investors in exchange
of funds. It is the very first time the company offers its shares for sale to the
investors and this process has a large number of benefits for the company.
Following are some of the reasons companies go public:
Exit Strategy: The liquidity is important for short-term investors and the
creation of market where shares can be traded provides liquidity for investors
to enter and exit. The sale of shares becomes much easier for the investors
due to creation of market post IPO.
Current market price of share - Offer price of share at the time of IPO
The above equation only gives the increase in value of the share over the years
however to compare the appreciation with the offer price is more suitable
indicator.
Therefore dividing the price appreciation by the offer price, we get the effective
% increase in value of shares since their issue.
Implication: The price of shares of HDFC AMC have appreciated 39.45% from the
time of issue i.e. in less than one year.
As per July 2018, HDFC AMC IPO got a valuation of Rs 23,161 crore, which is
close to 8% of its AMU amounting Rs 3,00,548 cr. The 8% factor worked on the
positive side for HDFC AMC as AMCs usually get a valuation of approximately
5-6% of the AUM.
After the issue was open from July 25-July 27 2018, the first quarter earnings
of HDFC AMC justified its valuation and reported 25% growth in the net profit,
which was backed by 29% growth in operating revenue.
The success of an AMC is weighed according to the assets it owns and how well
it manages them. HDFC AMC has an equity-debt AUM ratio at 50:50, in
comparison to industry average of 42:58.
Moreover, HDFC AMC's customer base rose by 29% and more than 60% of its
AUM comes from retail (monthly average basis), for instance, mutual funds.
Second example could be HDFC AMC's systematic investment plans (SIP),
which are predicting and achieving high profitability. A dominant percentage of
its SIPs, over 75%, are offered for a time period more than 5 years and rest for
more than a decade.
The above points prove a bright earnings for HDFC AMC stock, and also it hit
65% higher than the issue price on NSE (Rs 1100) at Rs 1,844 (in Aug 2018).
Recruiting new customers and talent: Post IPO, awareness is created among
the public about the company enabling company to reach out to potential
customers and recruit top talent. Post IPO, HDFC AMC’s consumer base rose by
29% and more than 60% of its AUM comes from retail (monthly average basis),
for instance, mutual funds.
As per the review HDFC AMC is the second largest asset management company
in India and it is reported stable in the Q2 FY 2019 earnings with 15% rise in net
profit and a better asset class mix.
Their exposure is around 40 crore towards IL&FS’s preference shares. It also hit
an impairment of ₹21 crore in Q2. Management gave a good insight in
confronting the mutual fund industry nowadays. It has also witnessed good
action of pulling its liquid funds. Actually, the main thing is that their asset
under management generally ranges between ₹40k-50k crore and it is being
increased to over 75k crore in the month of October, till now. While on the
other side AMC earns a very small fees on liquid funds, market share gain
during this period and it is the testimony of HDFC AMC’s strong brand.
Capital Raised
CATEGOR NO. TOTAL TOTAL TOTAL SHARES PLEDGED
Y OF OF SHAREHOLD NO. OF NO. OF SHAREHOLDI OR OTHERWISE
SHAREDOLD ERS SHARES SHARES NG AS A % OF ENCUMBERED
RS HELD IN TOTAL NO. OF
DEMAT SHARES
FORM
A AS A % OF
SA AS A TOTAL NO. OF
% % OF SHARES
OF (A+B+ NUMBER
(A+ C) OF
B) SHARES
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Individuals /
Hindu
- - - - - -
Undivided
Family
Central
Government /
- - - - - -
State
Government(s)
Bodies
- - - - - -
Corporate
Financial
Institutions / - - - - - -
Banks
Any Others 1 11,21,79,8 11,21,79,8 52.8 52.81
- -
(Specify) 30 30 1
1 11,21,79,8 11,21,79,8 52.8 52.81
Sub Total - -
30 30 1
(2) Foreign
Individuals
(Non-Residents
Individuals / - - - - - -
Foreign
Individuals)
Bodies
- - - - - -
Corporate
Institutions - - - - - -
Qualified
- - - - - -
Foreign Investor
Any Others 1 6,36,50,615 6,36,50,61 29.9 29.96
- -
(Specify) 5 6
1 6,36,50,615 6,36,50,61 29.9 29.96
Sub Total - -
5 6
2 17,58,30,44 17,58,30,4 82.7 82.77
Total 5 45 7
shareholding of
Promoter and - -
Promoter
Group (A)
(1) Institutions
12 20,74,827 20,74,827 0.98 0.98
Mutual Funds
- -
/ UTI
Financial 7 2,32,183 2,32,183 0.11 0.11
Institutions / - -
Banks
Central
Government /
- - - - - -
State
Government(s)
Venture
- - - - - -
Capital Funds
Insurance
- - - - - -
Companies
Foreign
Institutional - - - - - -
Investors
Foreign
Venture
- - - - - -
Capital
Investors
Qualified 97 82,84,035 82,84,035 3.9 3.9
Foreign - -
Investor
Nominated
investors (as
def. in Ch. XA - - - - - -
of SEBI (ICDR)
Regulations)
Market
- - - - - -
Makers
Any Others 11 23,76,349 23,76,349 1.12 1.12
- -
(Specify)
127 1,29,67,39 1,29,67,39 6.1 6.1
Sub Total - -
4 4
(2) Non-
Institutions
Bodies
- - - - - -
Corporate
Individuals - - - - - -
Individual
shareholders
holding
nominal share
capital up to 0 - - - - - -
Rs. 1 lakh
Qualified
Foreign - - - - - -
Investor
Any Others 5,120 38,53,820 38,53,820 1.81 1.81
- -
(Specify)
4,05,216 2,36,43,02 2,36,43,01 11.1 11.13
Sub Total - -
1 7 3
4,05,343 3,66,10,41 3,66,10,41 17.2 17.23
Total Public 5 1 3
shareholding - -
(B)
4,05,345 21,24,40,8 21,24,40,8 100 100
Total (A)+(B) - -
60 56
(C) Shares
held by
Custodians
and against
which - - - - - - -
Depository
Receipts have
been issued-
m
-1 - - - - - -
-2 - - - - - -
Sub Total - - - - - -
Total 4,05,345 21,24,40,8 21,24,40,8 100
(A)+(B)+(C) 60 56
The total market capital of HDFC AMC is 32612.98 Crores and the above table
showing that how much capital is being raised by different groups including
Promoters and Promotors group and under this category it includes (1) Indian
(2) Foreign investors. Next, is the Public Share Holding by (1) Institutions and
(2) Non-Institutions and in the last by Custodians.
Shares Over/Under Subscribed
The portion of the HDFC AMC issue designated for the Qualified institutional
buyers (QIBs) was subscribed 192.26 times, while those of non-institutional
individuals over 195.15 times. Retail quota was subscribed 6.71 times.
The IPO received bids for 1,56,17,60,954 shares against the issue size of
1,88,04,290 shares.