Prabhudas Lilladher's IPO report on UTI Asset Management Company
UTI AMC, the eighth largest AMC in India, is a dominant player in beyond T30 cities (B30) market. The growth for the company in last four years was largely driven by passive funds as it bagged chunky public investments in ETFs, pension and retirement funds. The Co witnessed steady healthy 15% QAAUM CAGR over the same period led by strong distribution franchise, sticky client base, strengths in managing retirement (2nd highest) and PMS funds. However lower yields on passive/alternate funds, higher cost structures and current pandemic led headwinds would cap near term return profile. Valuations at 26x/21x FY20/FY21E P/E based on upper price band of Rs554 although lower than peers (35-36x HDFC/NAM INDIA AMC) stand justified given business concentration risks weighing upon financials (3.5% QAAUM CAGR vs 14% industry CAGR, revenue at -3% CAGR and RoE decline of 958bps over FY17-FY20).
Valuation and Outlook
Hence, we suggest SUBCRIBE FOR LISTING GAINS and closely monitor journey towards high profit margin business.
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