ABSL AMC is the 4th largest Asset management company in terms of QAAUM and the largest non-bank affiliated AMC as of June 2021 with an AUM of Rs 2.9 trillion, a market share (based on QAAUM) of 8.5% in the industry and a client base accounts 7mn folio. ABSL AMC PAT has grown at a CAGR of 15% from FY18 to FY21, and RoE has improved by 700bps during the same period to 33.7%. ABSL AMC has the second highest share from B-30 centers, (FY16: 19.3% Q1FY22: 27.4%) At upper price band, IPO is priced at a P/E of 33x discount to peers (Nippon India P/E of 39x and HDFC AMC with P/E of 50x).
"With focus on growing market share through higher distribution tie-ups, increasing margin accretive business through ETF and equity asset classes and improving presence in B-30 centers, we believe that the company can grow AUM in line with the industry at 12-14% over the next 5 years. We recommend subscribing the issue," said IDBI Capital Equity Research in its report.
Key highlights and investment rationaleLargest non-bank affiliated AMC: ABSL AMC has maintained its market leadership as the largest non-bank affiliated AMC since FY18 with an QAAUM growth of 14.5% from FY16 to FY21. The company has been focusing on growing the margin accretive equity and ETF segments, with the MAAUM from the equity segment growing at a CAGR of 24.9% from FY16 to FY21. The growth in AUM is testament to the strong distribution architecture built by the company.
Growing Individual customer base driven by strong systemic flows and B-30 penetration: Individual investor MAAUM grew at a CAGR of 18.4% from FY16 to FY21 resulting in the mix of individual investors improving to 47.1% in FY21 from 40.0% in FY16. The total investor folios have more than doubled from 2.9m in FY16 to 7m in FY21, which represents a higher than industry level growth. The company has identified systematic transactions (such as SIPs) to help provide a steady inflow to support AUM growth. From FY16 to FY21, the SIP AUM has grown from Rs. 85.2 billion to Rs. 456.9 billion. The company’s focus on B-30 cities has also helped improve retention rates and help grow its retail presence. Strong brand recognition has been a corner stone in the B-30 journey. The contribution from B-30 cities has also helped the company its margin accretive equity segment book.
Pan India presence with strong distribution: The company has a presence in 284 locations, comprising of 194 branches in India spread across 27 states and 6 UTs, supplemented by 90 EMs located in B-30 cities. Direct, MFD, national distributors and banks contributed 47%, 30%, 14% and 8% respectively towards the QAAUM Q1FY22.
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