HDFC Asset Management Co Ltd’s shares soared 67 percent on the first day of trading following the Rs 2800.33 crore IPO reflecting bullish investor sentiment on Indian mutual fund managers who have seen record inflows in recent months.
Incorporated in 1999, Mumbai based HDFC Asset Management Company (HDFC AMC) Limited is a well-known fund house engaged in providing savings and investment products and is the country’s second largest asset manager in terms of assets under management totaling 2,93,254 crore.
The listing comes at an opportune time as the mutual fund sector has benefitted from Indians moving away from traditional investment avenues such as real estate and gold to financial savings. Adding to that the demonetization of Rs 500 & 1000 notes in November of 2016 has also helped boost inflows for mutual fund managers whose assets under management doubled in the three years to March 2018.
The offer price in the price band of Rs 1095 – 1100 was slightly on the higher side compared with its closest peers with a price to earnings ratio of 32.3 times its forward earnings, but with a strong brand reputation, diversified product mix and distribution, consistent investment performance and HDFC AMC being the most profitable in the 43-player sector, the valuations were not viewed as much of a hindrance by the investor community and the IPO was subscribed 83 times.
The IPO lived up to expectations with handsome gains for investors, opening 58.09% higher on the BSE at Rs 1,739 a piece going on to hit an intraday high of Rs 1835 per share.