ICICI Prudential AMC IPO: GMP hits Rs 500-mark; check listing expectations, targets & more

ICICI Prudential AMC IPO: Shares of ICICI Prudential Asset Management Company are set to make their Dalal Street debut on Friday, December 19 and the asset management player is likely to deliver a healthy listing pop to investors, if one goes by the grey market premium, which has been rising higher since the closure of the issue.

Ahead of its listing, shares of ICICI Prudential AMC were commanding a grey market premium of Rs 520-530 apeice, suggesting a listing pop of around 24 per cent listing gains for the investors over its issue price. However, its grey market premium was around Rs 300 during the bidding period and Rs 450 after its allotment.

Analysts and experts tracking the issue are highly positive on the company for a long-term perspective, with majority of them suggesting to hold the issue for a long-term basis. The company has seen fresh interest from the brokerages, who have initiated coverage on the stock even before its listing, suggesting a 39 per cent from its IPO price.

ICICI Prudential Asset Management Company is India’s leading mutual fund house, backed by strong parentage. Investors with a medium-to-long-term horizon may consider holding the stock post-listing as it is well positioned to benefit from the long-term growth of India’s mutual fund and wealth management industry, said Shivani Nyati, Head of Wealth at Swastika Investmart.

"However, given moderate grey market trends and fair valuations, short-term investors should book part profit and hold the remainder with stop loss of cost price. Overall, the stock is more suitable for long-term portfolio allocation than for short-term speculative trading," she adds.

The IPO of ICICI Prudential AMC was open for subscription between December 12-16, which was in the price band of Rs 2,061-2,165 per share with a lot size of six shares. It raised a total of Rs 10,602.65 crore via IPO, becoming the fourth most-subscribed public issue in India and fetched more applications than Tata Capital and HDB Financial Services.

The company benefits from a strong individual investor franchise, with Rs 6.6 trillion in MAAUM and a 13.7 per cent market share, supported by steady growth in SIP and other systematic inflows, providing stability and earnings visibility, said Mahesh M Ojha, VP of Research & Business Development at Kantilal Chhaganlal Securities.

"Compared with listed peers, it stands out with higher profitability, superior return ratios and scale in both retail and institutional segments. For investors, ICICI Prudential AMC factors well to capitalize on the long-term structural growth of India’s asset management industry so they may hold onto it for medium to long term," he said.

The issue was booked a total of 39.17 times, drawing bids for nearly Rs 2.97 lakh crore through more than 55.07 lakh applications. On an individual basis, the portions for QIBs were subscribed 123.87 times and the non-institutional investors (NIIs) were booked 22.04 times. The allocations for retail investors and shareholders were subscribed 2.53 times and 9.75 times, respectively.

PL Capital initiated coverage on the ICICI Prudential AMC, saying that it may eventually command a premium to HDFCAMC due to better distribution and diversification while having similar profitability. The brokerage has given it a 'buy' rating with a target price of Rs 3,000 apiece.

"We are optimistic about its business prospects given its strong performance/parentage which is driving the highest net equity flow market share among AMCs; its superior equity yields of 67 bps due to lowest distributor payout; it accounts for 73.7 per cent of MF sales of ICICI Bank; and a higher share of non-MF revenue at 9.2 per cent among peers," PL Capital added.

"We recommend investors to 'hold for the long term' after listing. For non-allotted investors, we advise against chasing the stock on listing day and suggest waiting for more reasonable entry levels post listing, as near-term volatility or price consolidation cannot be ruled out amid cautious market sentiment," said Prashanth Tapse, Senior VP of Research at Mehta Equities.

Citigroup Global Markets India, Goldman Sachs (India), ICICI Securities, Morgan Stanley India, BofA Securities, Avendus Capital, Axis Capital, BNP Paribas and CLSA India are among the 18 the book running lead manager and Kfin Technologies is the registrar of the issue. Shares of the company shall be listed on both BSE and NSE on December 19, Friday.