Jul 26

PEDIGREED Initial Public Offering FORCES BREAK OF SABBATICAL

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Hi Friends

It has been a very long time since I put my fingers to a keyboard on this blog. I was waiting for some opportunities to advise you. Activity is not equal to making money in the stock markets. Just staying still like a Zen Monk pays better dividends. I was waiting for some correction and since last one month the mid cap and small cap space has cracked and fallen to levels where some shares are in buy zone.

But I will reserve my buy list and analysis for next post.

This one is to tell you to APPLY IN THE IPO OF HDFC AMC which has opened today and has already been oversubscribed on day 1. It is likely to be over subscribed by about 3-5 times on a conservative side. But that is not what prompts me to recommend you to put your money. It is simply the pedigree of the brand HDFC. One of the biggest wealth creators in Indian stock market history. About 400 times money multiplier in the last 30 years. Not Bad. 

The same story was repeated with their second offering HDFC Bank. The IPO came in 1995 . The share was listed at Rs 40. The IPO was oversubscribed by 55 times. I did not get in the IPO but I bought on the day of listing. So, how has it fared in last 23 years? Rs 40 becomes Rs 10000. About 250 times. Not bad at all. It’s a different story that a lot of dunces like me got off the gravy train somewhere in between. I sold my 700 shares at Rs 200. And have never bought it again. Not because it is not a good bank or good business. It’s just ego and regret. You divorce a good partner, look for others for some time but do not go back to your divorced partner. Mainly ego. Read Ego is the Enemy by Ryan Holiday. 

Back to HDFC. Then came GRUH Finance from that stable. 20x in 16 years. The story has repeated itself of compounding money upwards of approx 25% CAGR.

The fourth one was HDFC LIFE. It was priced at Rs 230 and listed last year in 2017. Oversubscribed just about 2 times. One got complete allotment almost every alternate applicant. And the price has doubled since IPO. Though the price has no correlation with the intrinsic value, yet businesses from a good house are valued better. The premium one is willing to pay for an HDFC Bank versus an Andhra Bank is like a Mercedes Benz vs Hindustan Motors.

What about HDFC AMC? It is actually an offer for sale so the money is not received by HDFC Mutual Fund AMC but by HDFC and the promoters. But the brand HDFC has a track record which cannot be wished away. HDFC AMC and ICICI Prudential AMC are the alpha males of the Mutual Fund Industry of India. They have the largest market shares in terms of Assets Under Management (AUM). And HDFC has very high corporate governance standards. Also, for a patient investor shares of earlier four issues have given humongous returns. I have learnt it the hard way. Why not learn from someone who is slightly more experienced than you? So do the following:-

Step 1    Go to your Bank website (assuming you have a net banking based account). IF YOU DO NOT HAVE NET BANKING, IN THAT CASE CONTACT ANY OF THE MAJOR BROKERS WHERE YOU HAVE A DEMAT ACCOUNT AND ONE CAN SEEK A FORM AND APPLY PHYSICALLY BY FILLING THE HARD COPY OF THE FORM.

Step 2 Check out Investments Menu

Step 3 Apply IPO

Step 4 Select HDFC AMC IPO

Step 5 Validate your particulars. 

Step 6 Select Individual Investor(IND) option for the application.

Step 7 Apply for less than  or equal to 169 shares. Because the lot size is 13 or multiples of 13. And amount has to be less than Rs200000 to qualify as an individual retail investor. (Assumption money required for application  held in account.

If you are existing shareholder of HDFC, then step 6 changes to Select SHA (Shareholder) option.

Step 8 Submit.

Happy Gains ;-))

 

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1 comment

  1. Sir,

    Learned how to apply and did it today.. 52 shares@1100. Hope they get allotted..

    Shall add more as initial IPO fever goes down n mkt goes in a dip. Presently havent studied the business so just went for initial 52 shares.

    Very east step-by-step guide. Thanks

    Regards

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