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Aditya Birla Sun Life Asset Management


Hi, today we will talk about Aditya Birla AMC IPO. Taking less time, in this video, we will discuss the company's financials, IPO details, pros and cons of investing, details of the company, the objective of the company behind bringing up the IPO. So in the beginning let's discuss the objects behind the IPO. To bring this IPO, there's a simple reason- To achieve listing benefits to boost brand image and give visibility to the company. One more thing is that the whole IPO is offer for sale and there's no fresh issue. Through an offer for sale, the company is giving chance to its existing shareholders to sell its shares. Now let's talk about the company. The company was incorporated in 1994. It was named Birla Capital International AMC Ltd. It was renamed in 1999 as Birla Sun Life Asset Management Co. In 2017, it was renamed Aditya Birla Sun Life AMC. In terms of QAAUM, Quarterly Average Assets under Management, this company is considered the largest non-bank affiliated AMC in India. It is one of India's top AMC's as per QAAUM since 2011 according to CRISIL. As of June 2021, the figure of QAAUM (excluding FoFs) reached 2.75 lakh crores. As per other offerings, which have Portfolio management services, real estate, and offshore funds, the combined AUM reach 11525 crores as of June 2021. According to CRISIL, MAAUM from institutional investors was at 1.5 lakh crores. This makes the AMC industry of India as 4th largest. The comments equity-oriented MAAUM has risen with a CAGR of 24.94% in the last 5years. Because of which the company's equity-oriented MAAUM rose to 38.09% of the total MAAUM as of June 2021. The company is the 5th largest player in terms of market share in individual MAAUM. As per individual MAAUM, in the last 5years, it rose by a CAGR of 18.38%. The company has 7.18 million folios as of June 2021. Beyond the top 30 cities or B30, MAAUM rose to 44701 crores. It accounts for 15.76% of the total MAAUM as of June 2021. AUMs from SIPs have risen from 25.7% of total equity AUM in financial year 16 to 41.7% of total equity AUM in Quarter1, financial year 22. The company is currently running as a joint venture between Sun Life AMC and ABCL. ABCL is a listed non-operating holding company that manages the financial service business for Aditya Birla group. ABCL has a total AUM of 3.45 lakh crores and an active customer base of over 25 milion. Sun Life AMC is owned by Sun Life financial which is a global financial services provider with a market cap of Canadian 37.43 billion and AUM of Canadian 1.36 trillion. As per value research, Aditya Birla Sun Life AMC has been ahead of the market. They launched many new categories in the industry. You can see what they launched on your screen. India's first liquid fund was in 1997 with Aditya Birla Sun Life liquid fund. India’s first MNC fund was in 1999 with Aditya Birla Sun Life MNC fund. India's first Dividend Yield fund was in 2003 with Aditya Birla Sun Life. Dividend yield fund. India's first consumption theme-focused fund in 2005 with Aditya Birla Sun Life Gen Next fund. The company has a huge distribution network covering 248 locations across 27 states and 6 UTs. It has a multi-channel network including 6000 mutual fund distributors, 240 National distributors, and 100 bank & financial intermediaries. The direct channel accounts for 46.86% of QAAUM while 38.18% comes from mutual fund distributors, national distributors, banks & financial intermediaries. Their top mutual fund schemes account for 64.4% of the QAAUM while the top 20 schemes account for 86.71% of QAAUM. Now let's talk about the investment pros of the company. First is that it has growth potential in mutual funds because of under penetration as per developing and developed economies of the world. It has multiple drivers like Rising income, Large working-age population, Growth in urbanization, Rising financial literacy, and investing awareness. It helps the industry to maintain the growth momentum for a long period. Another advantage is its established brand image and has history of innovation. It helps it to have the advantage to maintain an edge, their market share will be good and will be in top players. Its association with ABCL, it has access to 25 million customers. Another advantage is its association with Sun Life. It gives access to asset management expertise, international market, and global reach. Sun Life is itself a big name in the global market. Now let's talk about the cons of investing in its IPO. First is its high concentrations in its top funds which generate risks. Its top 20 mutual funds account for 86.71% of the total AUM. It means that if any scheme back performs, it can be decremental for its interests. AMC industry is like a proxy for the economy of performance. So its growth is directly related to overall economic performance of a country. So if there is any slow economic activity, it has a direct impact on this industry. The industry has intense competition and the top players hold 83% of the market share. The biggest player has 15% of the market share. Incumbent players like Aditya Birla Sun Life AMC also face threats in technological disruption and new-age financial service providers. One more problem that the company has to face is heavy regulations on the industry and has a cap of TERs. TER is the total expense ratio which the regulator can change anytime. Because of this, their earning potential depends on regulatory limits and is at risk. The last point of investment con is the asset management industry nature which depends on its management. If any portfolio manager leaves the company then it can be decremental for the company. Now let's talk about the company's financials and IPO details. This table is on your screen. All the figures shown are in crores. First, let's talk about total assets. Here we can see a good rise. In financial year 20, it increased from 1571 crores to 1984 crores In terms of revenue, we can't see any change. Although we can see a slight decline. It decreased from 1234 crores to 1205 crores in financial year 21. Profit after tax increased from 494 to 526 crores. Now let's look at few important ratios. The net profit margin is 43.64% The operating Profit margin is 58.89% The company's earning per share is 18.27 PE Ratio is 38.97 while Industry's PE is 39.84. Debt to equity is 0.158 Its current ratio is 0.63. Its 2-year sales CAGR is -7.43%. Its 2-year profit CAGR is 8.53% In IPO details, the IPO is opening on 29th Sept 2021. Closing date is 1st Oct 2021. IPO Price band is Rs.695-712 per share.


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