Aditya Birla Sun Life AMC, the largest non-bank affiliated AMC in India by quarterly average assets under management, is expected to start the first day trade with at least 5 percent premium and the maximum opening premium could be 10-15 percent on October 11, say experts.
The low grey market premium & response to the public issue, rising competition and complete offer for sale issue could be some reasons for low listing gains, though the company has good financials track record, diversified distribution network, strong promoters background & brand position, and long-term track record of innovation in and use of technology.
The final issue price has been fixed at Rs 712 per equity share. It would be the 43rd company to debut on the bourses next week.
"Considering lower-than-expected subscription demands to its initial public offering (IPO), we expect 5-10 percent listing gain on a best case scenario," said Prashanth Tapse, VP Research at Mehta Equities.
Tapse believes reason for low premium would be investors' concern over offer for sale portion which is being done only for 13.5 percent of the total paid-up equity and also on valuation parameters as the issue was fully priced-in when compared with other listed peers.
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Gaurav Garg, Head of Research at CapitalVia Global Research and Astha Jain, Senior Research Analyst at Hem Securities expects 4-6 percent listing gains.
"The stock is expected to give a listing gin of round 4 percent to 6 percent. The issue seems to be reasonably valued when compared to its peers. One can expect moderate gains from the issue as the AMC space is dominated by bank-sponsored AMCs, however the financials of the company look good with 5.14 percent YoY growth in operating profit, 6.45 percent YoY growth on the net profit front, 6.45 percent YoY growth in EPS and 9.18 percent YoY growth on EBIT margin," Gaurav Garg reasoned.
Aditya Birla Sun Life AMC shares traded at a price of Rs 732-737 in the grey market, a premium of Rs 20-25 or 2.8-3.5 percent over the issue price of Rs 712 per share, the IPO Watch and IPO Central data showed.
The public issue was subscribed 5.25 times during September 29-October 1, largely supported by qualified institutional buyers whose reserved portion subscribed 10.36 times. The portion set aside for non-institutional investors was subscribed 4.39 times and retail investors 3.24 times.
The positive market conditions could also support the listing premium as the markets are headed towards record highs with gaining 2 percent last week. Even the significant increase in retail investors in the last more than a year with help of superior technology used by asset management companies as well as broking houses may also support the listing.
"The AMC industry has grown tremendously in recent years on the back of strong flows by the individuals as the AMC companies are increasing penetration across geographies. Also, the tech easiness is helping the millennials to get access to AMC easily," said Santosh Meena, Head of Research at Swastika Investmart.
He further said, "At the upper price band of Rs 712, the PE works out to be 33x based on annualized FY22 earnings which is slightly lower than peers so there is room for minor listing gain. We can expect around 10-15 percent listing gain as market sentiments are also bullish."
Aditya Birla Sun Life AMC raised Rs 2,768 crore through its public issue which was an offer for sale by promoters Aditya Birla Capital and Sun Life AMC.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.