Aditya Birla Sun Life AMC Ltd

May be Subscribed for Long Term

BASIC DETAILS ABOUT IPO (29 Sept-1 Oct)

PRO’s & CON’s- 5,6,7
Price Band 695-712
Bid Lot 20
OFS (Amount) 2768.26cr SHAREHOLDING
Total issue amount- AT Upper Band 2768.26cr Particular Pre-Issue Post-Issue
Post issue Implied Market Cap 20505.6cr Promoter 100% 86.5%
Post issue (Shares) Cr 28.8cr Public - 13.5%
Book Runner & Lead Manager: Total 100% 100%
Kotak,BoFA,Citi,Axis Capital, HDFC, ICICI Sec, IIFL
Sec, JM Financial, Motilal ,SBI Capital & Yes
Securities

• Offer for sale By

✓ Aditya Birla Capital 28.5 lac share
✓ Sun Life AMC 3.6 cr share

Industry /Business (1-4 Page)

• As of calendar year 2020, India has one of the largest young populations in the world, with a median age of 28
years
• As per the 2018 revision of World Urbanization prospects, the urban population was estimated to comprise
34.9% of total population in India. This is forecast to reach 37.4% by 2025
• According to IMF estimates, India’s per capita income (at constant prices) is expected to grow at a CAGR of 6.2%
over between the financial years 2021 and 2025.
• Although literacy in India is 77.7% but Financial literacy is only 27%
• Household savings in Physical assets declined to 58% in FY20 from 67% in FY12.
• In the same time frame Financial savings grew from 31% to 41%.
• Mutual fund AUM as a percentage of GDP has grown from 4.3% in the financial year 2002 to approximately 16%
in the financial year 2021
• Average AUM grew at 16.4% CAGR to ₹33.18 trillion as of June 2021 from ₹7.01 trillion as of 2011.
• Direct Plan as % of Total AUM rose from 35.02% in Mar 2014 to 45.95% in June 2021.

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 Aditya Birla Sun Life AMC Ltd
May be Subscribed for Long Term
PIC 1

PIC 2

PIC 3

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 Aditya Birla Sun Life AMC Ltd
May be Subscribed for Long Term
PIC 4

The following diagram sets forth the historical mutual fund QAAUM as a percentage of GDP in India as of the end of the
financial periods indicated:

PIC 5
• Individual AUM is growing at faster pace…as many new investors are coming to market.

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 Aditya Birla Sun Life AMC Ltd
May be Subscribed for Long Term
PIC 6

PIC 7

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 Aditya Birla Sun Life AMC Ltd
May be Subscribed for Long Term
PRO’s
• Company is in the Industry which has huge potential to grow
➢ AUM to GDP of India is 15% while for Brazil it is 81% or for US is 140% (PIC 1)
➢ Household savings have been increasing with CAGR 7.6% from FY12 to FY20.(PIC 2)
➢ Financial savings as % of Housing savings rose from 31% in FY12 to 41% in FY20(PIC 3)
➢ QAAUM as % of GDP rose from just 4.3% in Mar 2002 to 7.6% in Mar 2011 to 15.4% in Mar
2021 (PIC 4)-QAUM growth is expected at CAGR of 11-13% till FY26
➢ Individual AUM as % of Total AUM rose from 43.87% in Mar 2014 to 53.77% in June
2021..which shows the increase in new investors coming to market also it is to be noted that
median age of our country is 28 years which is also good for the Industry.(Pic 5)
➢ Based on CRISIL Report AMC’s Revenue/PAT is expected to double in next 5 years(PIC 6)

• Company has quality management

➢ A Balasubramanian (MD and CEO) was chairman of AMFI
➢ Ajay Srinivasan (Non executive Director) held leadership position for Prudential ICICI AMC
➢ Bobby Parikh (Independent Director) on board of Biocon Ltd, Infosys ltd etc
➢ Alka Bharucha (Independent Director) solicitor of supreme court of England and Advocate on
record of Supreme court of India. On Board of Birlasoft etc

• Based on Peer comparison company is not aggressively priced.

Peer PAT FY21 FY21
Comparision Mcap/QAAUM PB PE QAAUM ROE Margin Revenue PAT Mcap
HDFC AMC 16.2% 14.1 49.3 416950 30.1% 60.4% 2194 1326 67530
Nippon Life
AMC 11.3% 8.75 38.4 240364 23.9% 47.9% 1419 680 27122
UTI AMC 7.4% 4.3 25.4 187210 16.5% 42.3% 1169 494 13931
Industry 11.6% 9.1 37.7 281508 23.5% 50.2% 1594 833.3 36194
ABSL AMC 7.4% 11.4 33.5 275453 34.8% 44.2% 1191 526 20505.6
QAAUM- Quarterly Average Assets Under Management

➢ Company’s QAAUM has been growing continuously from FY19 to June 2021.

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 Aditya Birla Sun Life AMC Ltd
May be Subscribed for Long Term
• Whole Industry Profitability has been increasing because of rising share of Direct plan (From 38.38% in March
2016 to 45.95% in June 2021) compared to Regular plan which involves commissions , Company’s share from
direct plan has been growing at greater pace (from 38.58% in March 2016 to 50.05% in June 2021)

• Company has many big names as Book Runner /Lead managers : Kotak,BoFA,Citi,Axis Capital, HDFC, ICICI Sec,
IIFL Sec, JM Financial, Motilal ,SBI Capital & Yes Securities

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 Aditya Birla Sun Life AMC Ltd
May be Subscribed for Long Term
CON’s
• Company has not been able to increase its market share in the Industry but it is to be noted that based on
QAAUM company is amoung the 4 largest AMCs in India since September 2011.

• Based on Growth in Revenue and PAT from FY19 to FY21 company has performed the worst compared to
listed players.
Peer FY19 to
Comparision FY21 FY20 FY19 FY21(Growth)
PAT PAT PAT
Revenue PAT % Revenue PAT % Revenue PAT % Revenue PAT
HDFC AMC 2194 1326 60% 2124 1262 59% 2075 931 45% 5.7% 42.4%
Nippon Life
AMC 1419 680 48% 1192 415 35% 1647 486 30% -13.8% 39.9%
UTI AMC 1169 494 42% 854 271 32% 1051 353 34% 11.2% 39.9%
Industry 1594 833 52% 1390 649 47% 1591 590 37% 1.0% 41.2%
ABSL AMC 1191 526 44% 1234 494 40% 1407 447 32% -15.4% 17.7%

• Company has higher concentration

➢ Top 5 schemes accounted for 40.30% of Total QAAUM (Total 118 schemes)
➢ Top 5 equity oriented QAAUM account for 59.73% of Total Equity oriented QAAUM(Total 37
equity schemes)
➢ Top 5 debt oriented QAAUM account for 69.03% of Total Debt oriented QAAUM(Total 68 Debt
schemes)

• 48 (of Total 118 schemes) of company’s schemes representing 54.65% of Total QAAUM have underperformed
their respective benchmark during the 3 months ending 30 June 2021.

• Eventually shareholding has to be reduced from 86.5% to 75%. Thus selling overhang .

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 Aditya Birla Sun Life AMC Ltd
May be Subscribed for Long Term

Anchor Book 789cr

ICICI Prudential Fund 12.7%
HDFC Fund 10.1%
SBI Fund 10.2%
HSBC Global 7.3%
Axis Fund 8.9%
SBI Life 8.9%
Abu Dhabi Investment 8.2%
International Monetary Fund 2.0%
HDFC Life 7.8%
Morgan Stanley Asia 2.8%
Other 21.2%
TOTAL 100.00%

ABOUT THE RESEARCHER:

All the IPO’s research you have been receiving since long on various IPO has been by the Researcher Arman Nahar. All the
views expressed are personal and just for educational purpose. Neither the author nor any organisation whtsoever will be
responsible for any profit/Loss. Always consult your financial expert before taking any final decision.

Arman Nahar

CA, USA CFA L3 candidate

Linkedin- https://www.linkedin.com/in/ca-arman-nahar-609b7b76

You can also have a look at my previous Research on my blog- http://armannahar333.blogspot.com/?m=1

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