Started in 1995, Reliance Nippon Life Asset Management Limited is one of the largest asset management companies in India, managing total AUM of 3,625.50 billion as of June 30, 2017. RNLAML is involved in managing (i) mutual funds (including ETFs); (ii) managed accounts, including portfolio management services, alternative investment funds ('AIFs') and pension funds; and (iii) offshore funds and advisory mandates. RNLAML was ranked the third largest asset management company, in terms of mutual fund quarterly average AUM ('QAAUM') with a market share of 11.4%, as of June 30, 2017, according to ICRA. RNLAML managed 55 open-ended mutual fund schemes including 16 ETFs and 174 closed ended schemes for Reliance Mutual Fund as of June 30, 2017. RNLAML has a pan-India network of 171 branches and approximately 58,000 distributors including banks, financial institutions, national distributors and independent financial advisors ('IFAs'), as of June 30, 2017. RNLAML manages offshore funds through their subsidiaries in Singapore and Mauritius and has a representative office in Dubai, which enables them to cater to investors across Asia, Middle East, UK, US, and Europe. As part of their managed accounts business, they provide portfolio management services to high net worth individuals and institutional investors including the Employees' Provident Fund Organization ('EPFO') and Coal Mines Provident Fund Organization ('CMPFO'). Their Subsidiary, Reliance AIF Management Company Limited ('Reliance AIF') manages two alternative investment funds, which are privately pooled investment vehicles registered with SEBI. Further, they received a certificate of commencement of business as a pension fund manager from the Pension Fund Regulatory and Development Authority ('PFRDA') in 2009 and manage pension assets under the National Pension System ('NPS'). On performance front, RNLAML has posted turnover/net profits of Rs. 712.67 cr. / Rs. 198.96 cr. (FY13), Rs. 784.03 cr. / Rs. 302.30 cr. (FY14), Rs. 930.11 cr. / Rs. 349.59 cr. (FY15), Rs. 1271.07 cr. / Rs. 390.12 cr. (FY16) and Rs. 1400.44 cr. / Rs. 405.57 cr. (FY17). For three months ended on 30.06.17 of the current fiscal, it has reported net profit of Rs. 83.44 cr. on a turnover of Rs. 378.15 cr. Thus company has posted healthy growth over last couple of years on consistent basis. RNLAML has posted an average EPS of Rs. 6.68 and average RoNW of 22% for last three fiscals. Issue is priced at a P/BV of 8.97. It has no listed peers to compare with as per DRHP. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 43.92. As there is no peers to compare, so its difficult to say what will be proper valuations.. As per financials, company's growth is good, RoNW is 22% for last three fiscals and issue is priced at P/E of around 44. Mutual Funds and Asset Management sector is growing at good pace and expected to continue same growth for next couple of years and being one of the largest player of sector with wide network across the country, company expected to show same growth for next couple of years. So we give SUBSCRIBE rating to this IPO.
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