HDFC MF IPO gets Sebi nod, to open on July 25
HDFC Mutual Fund’s initial public offer (IPO) has received approval from the Securities and Exchange Board of India (Sebi) at a time when market conditions have turned robust. However, valuation of the much-awaited IPO is likely to be lower than the widely expected figure of ~350 billion. According to people in the know, HDFC MF’s IPO would be launched at a valuation of anywhere between ~270 billion and ~330 billion. According to sources, Sebi has issued its final observations and Registrar of Companies (ROC) approval is awaited. This is mostly a procedural exercise. At ~350 billion, HDFC MF would have been valued at 11 per cent of its total assets under management (AUM) as of March 31, and in terms of P/E it would have been around 49x its trailing-12 month earnings. To be sure, HDFC MF scores better than Reliance MF when it comes to certain key operational ratios. For instance, HDFC MF’s return on equity as of March 31, 2018, stood at 40 per cent while that of Reliance MF was at 25 per cent. Also, while both these fund houses have a similar topline of around ~18 billion, HDFC MF has a higher PAT margin of 39 per cent vs Reliance MF’s PAT margin of 29 per cent.