Aditya Birla Sun Life tanks 12% in 2 days; stock hits record low

Shares of Aditya Birla Sun Life AMC hit a new low of Rs 312 as they fell 8 per cent on the BSE in Monday’s intra-day trade. In past two trading days, the stock of AMC slipped 12 per cent after government classified capital gains arising from sale of debt mutual funds as short-term capital gains.

Aditya Birla Sun Life AMC (ABSLAMC), the investment manager of Aditya Birla Sun Life Mutual Fund, is a joint venture between the Aditya Birla Group and Sun Life Financial Inc of Canada.

With past two days decline, the stock has corrected 56 per cent from its issue price of Rs 712 per share. ABSLAMC made its stock market debut on October 11, 2021. It had raised Rs 2,768 crore through initial public offering (IPO).

ABSLAMC also operates multiple alternate strategies including Portfolio Management Services, Real Estate Investments and Alternative Investment Funds. ABSLAMC is one of the leading asset managers in India, servicing around 8.1 million investor folios with a pan India presence across 280 plus locations and a quarterly average asset under management (QAAUM) of Rs 2,817 billion for the quarter ending December 31, 2022 under its suite of mutual fund.

Finance Bill 2023 has introduced an amendment that will classify capital gains arising from debt mutual funds as only short-term capital gains. As per the proposal, debt funds (having 35 per cent or less of AuM in domestic equities) held for 3 years or more will not enjoy any indexation benefit.

Earlier, debt funds held for 3 years or more were taxed at the long term capital gain (LTCG) rate of 20 per cent with indexation or 10 per cent without indexation. With this amendment investment in debt mutual funds will be taxed as per normal slab rates.
Likely motive behind this move is to reduce arbitrage between fixed deposits and debt MFs. However, stock reaction seems unwarranted as impact on net debt flows and overall earnings may not be significant given debt MFs are open ended providing more flexibility and offer a compounded cash flow advantage. We do not foresee significant shift in corporate debt flows, yet HNI flows may see some impact, analysts at Prabhudas Lilladher said.

In terms of listed AMCs, debt contribution to AuM for HDFC / Nippon / ABSL / UTI stands at 27 per cent / 23 per cent / 36 per cent / 15 per cent. Hence, UTI AMC would be the least impacted, while ABSL would be most affected, the brokerage firm said.