Buy UTI AMC; target of Rs 1650: Motilal Oswal

Motilal Oswal's research report on UTI AMC

UTI AMC’s 1QFY26 operating revenue stood at INR3.8b (in line), up 13% YoY/6% QoQ. Yield on management fees stood at 42bp in 1QFY26 vs. 43.4bp in 1QFY25 and 42.4bp in 4QFY25. Total opex was up 16% YoY to INR2.1b. As bp of QAAUM, it remained flat YoY at 22.9bp in 1Q (vs. 24.3bp in 4QFY25). EBITDA was up 9% YoY/12% QoQ at INR1.7b (8% miss on account of higher employee costs). EBITDA margins stood at 45.4% vs. 47.1% in 1QFY25 and 42.6% in 4QFY25. PAT declined 8% YoY to INR2.5b (15% beat), driven by better-than-expected other income. Higher employee costs were offset by other income. FY26/FY27 earnings estimates remain broadly unchanged. We expect UTI to report a CAGR of 15%/12%/15% in AUM/revenue/core PAT over FY25-27E. The stock trades at FY27E P/E of 18x and core P/E of 28x. We reiterate our BUY rating with a one-year TP of INR1,650 (based on 32x core FY27E EPS).

Outlook

We expect UTI to report a CAGR of 15%/12%/15% in AUM/revenue/core PAT over FY25-27E. The stock trades at FY27E P/E of 18x and core P/E of 28x. We reiterate our BUY rating with a one-year TP of INR1,650 (based on 32x core FY27E EPS).