The company is well-positioned to capitalise on favorable industry dynamics, including the under-penetration of mutual fund products, Asit C Mehta said.
The maiden public offer of UTI Asset Management Company has so far received a tepid response from investors. Experts feel the hefty demand for Mazagon Dock due to attractive valuations could be the reason behind it.
The public issue has been subscribed 2.3 times on October 1, the last day of bidding, as the IPO has received bids for 6.31 crore equity shares against offer size of 2.73 crore equity shares, the data available on the exchanges showed.
The offer size mentioned above was after the exclusion of the anchor portion. The company raised Rs 644.64 crore from several anchor investors.
The portion set aside for retail investors was subscribed 2.32 times and that for employees was subscribed 1.34 times. The company has reserved 2 lakh equity shares for employees.
The reserved portion of qualified institutional buyers has seen 3.3 times subscription and that of non-institutional investors 92 percent.
Incorporated in 2002, UTI Asset Management Company is in the business of managing the domestic mutual funds of UTI Mutual Fund. It also provides portfolio management services (PMS) to institutional clients and high net worth individuals (HNIs), and manage retirement funds, offshore funds and alternative investment funds.
UTI AMC is the second-largest asset management company in India in terms of total AUM and the eighth largest asset management company in India in terms of mutual fund QAAUM as of June 2020.
The public issue consists of an offer for sale of 3,89,87,081 equity shares by State Bank of India, PNB, LIC, Bank of Baroda and T Rowe Price International. Hence the company will not receive any funds from IPO.
The price band for the issue has been fixed at Rs 552-554 per share.
"The company is well-positioned to capitalise on favorable industry dynamics, including the under-penetration of mutual fund products. At the upper price band of Rs 554, the stock trades at 25.7x its FY20 EPS of Rs 21.53. We recommend to subscribe the issue from a long-term perspective," Asit C Mehta said.
It managed 153 domestic mutual fund schemes, comprising equity, hybrid, income, liquid and money market funds as of June 2020. UTI AMC’s total QAAUM for domestic mutual funds was Rs 1,33,630 crore, while the other AUM was Rs 8,49,390 crore.With 1.09 crore live folios as of March 2020, its client base accounts for 12.2 percent of the approximately 8.97 crore folios that, according to CRISIL, are managed by the Indian mutual fund industry.