ICICI Prudential AMC Set for a Strong Market Debut: Why Investors Are Bullish on This Stock

Investors are gearing up for a strong market debut of ICICI Prudential Asset Management Company (AMC) on Friday, following a highly successful initial public offering (IPO) that saw a massive response from investors. The company's shares are expected to list with gains of around 10-20%, driven by strong investor appetite for the stock.

Strong IPO Response

The ₹10,602.65-crore IPO was subscribed 39.17 times, with the grey market premium (GMP) reaching as high as ₹375, or 17.3%, on Thursday evening. This suggests that the stock could list at above ₹2,500. The company sold shares at ₹2,165 apiece in the issue.

Brokerage Views

Brokerage PL Capital has assigned a 'Buy' rating with a price target of ₹3,000 on the stock, implying an upside of 38.6% from the issue price. Analysts believe that ICICI Prudential AMC may eventually command a premium to HDFC AMC due to better distribution and diversification while maintaining similar profitability.

Valuation and Comparison

At the upper price band, ICICI Prudential AMC is trading at a price-to-earnings (P/E) multiple of 33 times, compared with 41 times for HDFC AMC and 39 times for Nippon Life India Asset Management. The IPO priced ICICI Prudential AMC at ₹1.07 lakh crore.

Analysts say that the issue is fully priced at its post-issue P/E multiple of 33 times FY25 earnings. However, the company's leadership across active and individual assets under management (AUM), strong profitability and return ratios, a debt-free balance sheet, and supportive industry tailwinds provide healthy visibility for compounding.

Investment Strategy

Investors who received allotment in the IPO are advised to hold the shares for the long term, while fresh investors could wait for a minor dip or invest in a staggered manner if the post-listing run-up is sharp. The regulatory overhang from changes in the mutual fund fee structure is now behind the industry, and there is clarity on the impact of the regulatory changes.

Remember, this is a perspective, not a prediction. Do your own research and consider your own risk tolerance before making any investment decisions.