IPO Review - Aditya Birla Sun Life AMC - ICICI Direct

Aditya Birla Sun Life (ABSL) AMC, a JV between Aditya Birla Capital Ltd and Sun Life AMC, is one of the leading asset management services in India. ABSL AMC is ranked as the largest non-bank affiliated AMC in India in terms of Quarterly Average AUM (QAAUM) since 31st March 2018, and ranks among four largest AMCs in India by QAAUM since September 2011. As on June 2021, the company's total AUM stood at Rs. 293642 crore.

Investment Rationale

Growth driven by strong systematic flows

ABSL's individual investor MAAUM has seen growth at a CAGR of 18.38% from Rs. 54613 crore in March 2016 to Rs. 126982 crore in March 2021 and Rs. 133353 crore in June 2021. It is the fifth largest player in terms of market share in individual MAAUM among top 10 AMCs. Investor folios were more than doubled from 29.3 lakh in March 2016 to 71.8 lakh in June 2021, taking the market share to 7.13%. The growth in customer base and individual investor MAAUM has been largely driven by development of its digital platforms, particularly in the utilization of systematic transactions, as well as focus on building relationships with distributors, especially through deepening the B-30 cities presence.

The investments through systematic transaction have become a popular form of investing in the mutual funds as it offers customers the opportunity to invest smaller amounts over longer periods and helps mitigate the risk of market timing. The company offers a range of systematic transaction options and add-on features including SIPs, STPs and SWPs. As of June 30, 2021, SIPs have become a material proportion of the AUM accounting for ~41.7% of total equity-oriented mutual fund AUM and ~34% of total individual investor mutual fund AUM. The outstanding SIPs grew from 8.6 lakhs as of March 31, 2016, to 28 lakhs as of June 30, 2021, and SIP AUM grew from Rs. 8523 crore to Rs. 45692 crore over the same period. The share of SIP AUM in total equity-oriented mutual fund AUM increased from 25.7% to 41.7% during the same period, which was higher than the industry shares of 31.36% as of June 30, 2021. As of June 30, 2021, 86.31% of outstanding SIPs had more than 5-year vintage, while 77.05% of outstanding SIPs had a more than 10-year vintage depicting customer stickiness.

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Source : Equity Bulls

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