New Delhi: Investors who were lucky enough to be alloted HDFC AMC shares in the IPO must be elated today. HDFC AMC shares surged to ₹ 1,844 at the day’s high on NSE, before closing at ₹ 1,815, up 65% from the issue price. For some analysts, the Day 1 gains in HDFC AMC shares were not surprising. Its lineage (HDFC group company), wide distribution franchise, strong retail base and profitable ratios had led many brokerages to being optimistic about the HDFC AMC IPO.
Now, the question facing some investors who are sitting on big gains is should they cash out. Some investors who missed out on the IPO allotment might be wondering if it is time to buy HDFC AMC shares. Livemint spoke to a few analysts who shared their views on the stock.
G Chokkalingam, MD of Equinomics Research & Advisory, said tactical or short-term investors can sell in phases as the valuation at current levels looks stretched. At current levels, fresh investors should stay away and only buy on declines, he said.
“In our view, in the short to medium terms, the valuation is highly stretched. At the current price, HDFC AMC shares trade at 53 times FY18 earnings and 41 times FY19E earnings, assuming 30% year-on-year growth in profits, in line with the trend. The market cap is 12.8% of its AUM, which is a highly stretched valuation," Chokkalingam said.
“Short-term investors and traders may consider booking profits in phases (some previous IPOs from the financial services industry moved up tactically beyond what the fundamentals would dictate before correcting quite significantly) at every significant rise from the current levels. Those long term investors who are willing to wait for more than two to three years, may hold," he added.
Sanjiv Bhasin, EVP, Markets & Corp Affairs, at IIFL, said short-term investors can use the current euphoria around the stock to book partial profits. But new investors should look at declines to enter the stock, he added. The stellar listing of HDFC AMC shares did not surprise him, given the company’s pedigree and the strong outlook for the mutual fund sector. Both the insurance and mutual fund industries are sunshine sectors and will attract a lot of inflows in the future, Bhasin said.
“ ₹ 1,800/share is a good level to book partial profits for existing investors and ₹ 1,400-1,500 is a good entry point for fresh investors," he added.
Rajesh Baheti, managing director of Crosseas Capital Services, says the market momentum could take HDFC AMC shares even higher in the short term. Long-term investors can look to stay invested in the stock, he added.
The HDFC AMC IPO was open between 25 July and 27 July and the fund house had offered 25.46 million shares in a price band of ₹ 1,095-1,110 apiece. The issue price was fixed at ₹ 1,100.
HDFC AMC is a joint venture between mortgage lender Housing Development Finance Corporation (HDFC) and Standard Life Investments. HDFC AMC is the second biggest fund house in the country.