Aditya Birla Sun Life AMC accepts IPO test
The company had an 8.3% market share in the country’s mutual fund industry as of June 2021 with assets under management of 2.9 lakh crore. It has more than 66,000 distributors covering more than 280 locations with a presence in level II and level III cities. Its total folio number (accounts) at the end of June 2021 was 7.2 million. Folio growth between March 2016 and March 2021 was 19% per year, compared to the 15% growth in the industry’s total folio number. He has a strong retail franchise. The proportion of the systematic investment plan (SIP) increased to 41.7% of its total assets in equities in June 2021 from 25.7% in March 2016.
The mutual fund space is highly regulated and there is intense competition among the top five AMCs. Most large companies are affiliated with banks, which gives them access to the banking network. While the presence of banks helps AMCs get new business, Aditya Birla Sun Life AMC has carved out a space for itself for 25 years without the backing of a bank.
In recent years, mutual funds have become a solid investment option due to the low yields on term deposits. This bodes well for Aditya Birla Sun Life.
The company’s revenue fell to 1,191 crore yen in FY21 from 1,407 crore in FY19. However, net profit increased by 526 crore vs. 446 crores during the period due to lower spending. The return on equity of the company was over 30.9% in FY21, compared to 15-28% for listed companies.
Based on FY21 earnings, the company’s price-to-earnings multiple is 38, compared to 39-51 for its peers including HDFC AMC, UTI AMC and Nippon Life India Asset Management. Given the reasonable valuation, the tremendous growth in the past, and the growing popularity of mutual fund investments, long-term investors may consider the IPO.