Market experts predict HDFC AMC to list at 30-35% on the offer price issued on Monday (Aug 6). HDFC AMC raised ₹2800.33 cr for 2,54,57,555 equity shares through IPO. The final offer price was ₹1,100 per share. HDFC AMC IPO saw an overwhelming response on the last day with high demands from qualified institutional investors and non institutional investors. Retail investors subscribed at double the rate on the last day.
83 times subscription
HDFC AMC subscribed 83 times on the last day for many reasons. The fact that it is backed by Foreign and Indian Institutional Investors derive strong earnings. The wealth accumulated over the years in the form of profitable CAGR (Compound Annual Growth Rate- a scale to measure growth over multiple time periods), long term performance and its brand name – HDFC, are the reasons for oversubscription.
HDFC group companies usually trade at premium valuation and the same is expected from HDFC AMC too.
Premium Listing
Experts propose a 30-35% on the offer price for the listing on Monday. The listing could be anywhere between ₹1,400 – ₹1,500, they say. So investors who have been allotted shares can expect good returns if they hold them on a short term basis. However, the valuation of the company is bound to rise and experts suggest long term holding of the shares.
Siddharth Khemka, Head- Retail research, Motilal Oswal Securities says that looking at the huge oversubscription of the issue, the issue could list at a premium of around 30-35 percent i.e. in the range of ₹1,450-1,500 levels.
Buying and selling shares
Experts suggest that if the company lists anywhere below 30% of the offer price then they can be purchased. For long term investments a reach of 70-80% on the offer price is suggested.
They believe that business performance in the longer run will attract more AUMs (Asset Under Management) which will have a strong impact on growth. So they suggest holding until ₹1,700 – ₹1,800 price target.