After HDFC AMC's stellar listing, what should you do?

NEW DELHI: Many small IPO investors would envy those who made it big in HDFC Asset Management Company (HDFC AMC) on Monday. But with the stock hitting the Rs 1,800 mark against its issue price of Rs 1,100, the lucky ones are wondering whether they should take profit off the table.Analysts say it looks wise for retail investors to take part profit as a higher listing meant a likely moderation in future gain prospects. Astha Jain, Senior Research Analyst at Hem Securities, expects the stock to hit Rs 2,000 level in the next 6-12 months. "But investors with a very short-term horizon may book one-fourth or even half of their holdings as we were expecting the stock to list anywhere between Rs 1,600 and Rs 1,700," Jain said.HDFC AMC IPO was a big hit among investors with 83 times subscription and its listing at 58 per cent premium to issue price was higher than 56 per cent average return issues with similar demand delivered in the last five years. The scrip surged 66 per cent to hit a high of Rs 1,832 on the BSE today, commanding nearly Rs 38,700 crore in market capitalisation.Brokerage Nomura India last week initiated bullish view on India’s asset management companies (AMCs), given the strong growth opportunity and improving operational metrics, which it believes are more structural and less cyclical. "We expect a 20 per cent CAGR in AUMs over FY18-25 with improving equity mix, as the sector is one of the key beneficiaries of the rising financial savings mix while penetration levels are still extremely low. In our view, operating leverage and improving equity mix should take care of yield pressures, while strong AUM growth should support profitability improvement," it said. To a query on whether HDFC AMC is a stock one should be happy to own for the next 3-5 years, Shyam Sekhar of ithought had a cryptic reply, saying he would not like to spoil the party on a day when it is a kind of "Bahu-coming-home-after-marriage moment"."What you pay determines how much you will earn. Returns are a function of what value you give to a company when you buy it. Being very generous at the point of acquisition would mean that you should moderate your return expectations over time and not expect others to be as generous as you are for extended periods of time," Sekhar told ET Now.When an IPO is being hailed at this grand moment and the party is happening, "I would just like to sound this word of caution. I do not want to spoil the party though".Before this, Apollo Micro Systems had on January 22 listed at 73.82 per cent premium over its issue price.Ambar Enterprises (up 37.37 per cent), Bandhan Bank (up 29.33 per cent) and Lemon Tree Hotels (up 10 per cent) were among a few key IPOs this year that delivered decent listing gains to investors.HDFC AMC is only the second listing by an asset management company.The Rs 2,800 crore initial public offering (IPO) ran on July 25-27 and was subscribed 83 times. This was strikingly similar to the response received by the issue of its peer Reliance Nippon Asset Management for its Rs 1,542 crore issue last year. Reliance Nippon Asset Management had listed at 17 per cent premium.Data compiled by ETMarkets.com for the last five years suggest that IPOs receiving similar or higher subscription have on an average delivered 56 per cent listing gains.Investors who want to invest freshly into HDFC AMC stock should wait for another two or three weeks so that the price rationalises a bit, said Payal Pandya of Centrum Broking. Pandya said investors should then 'buy' the stock in a staggered manner for a long haul.An SIP in HDFC equity or SIP in HDFC AMC stock?"I would always say HDFC equity because you need a diversified portfolio for a customer while HDFC AMC will continue to do very well. But it is the HDFC equity SIP which I would suggest," Neeraj Choksi, Managing Partner, NJ Group, told ET Now. 65288077 65287118

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