UTI AMC surges 6% to 52-week high on robust Q4 numbers; InCred raises target price

So far this year, UTI AMC share price has rallied around 13 percent, outpacing Nifty which has risen 3.6 percent during this period.

Shares of UTI Asset Management Company (AMC) surged more than 6 percent on April 26 morning to hit a fresh 52-week high of Rs 1,005.15 after the company posted a robust set of numbers for March quarter.

The company reported a 90 percent on-year surge in profit to Rs 163 crore revenue 38 percent increase in revenue at Rs 416 crore.

InCred Equities said UTI AMC  schemes’ improving performance led to steady inflow and healthy AUM, rationalisation of operating expenses strengthened operating performance and the company has a favourable risk-reward ratio.

The brokerage retained its “add” rating on the stock and raised the target price to Rs 1,100 from Rs 1,050.

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According to Nuvama Institutional Equities, despite the strong PAT and revenue, it was a weak quarter for the company, as its equity assets under management (AUM) grew just 0.2 percent sequentially even as the industry posted strong equity inflows of Rs 94,200 crore.

Weak fund performance persisted, spurring net outflows from equity schemes in the quarter under review.

UTI AMC's core operating earnings in the March quarter came in at Rs 130 crore, up 43.4 percent on-year as employee and other expenses remained elevated on account of increased investments in people, in subsidiaries and expansion in foreign geographies.

Other expenses also remained high due to larger payments to the PFRDA, and index service providers as ETF AUM increased.

The company has a 3.7 percent market share in equity AUM. Nuvama analysts see its investments in the international and retirement solutions businesses adding wind to its sails.

"The company’s strong distribution presence in the semi-urban and rural areas enables it to garner granular AUM," the brokerage said.

UTI AMC, however, has the highest costs as a percentage of AUM at 26bp for FY24 versus listed peers, largely due to steep costs in the non-officer category employees.

Costs remaining under check is the key to operating leverage playing out, said Nuvama, as it maintained a “hold” call on the stock with a target price of Rs 1,020.

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At 10.33 am, UTI AMC shares were trading 3.6 percent higher at Rs 982.10 on NSE. So far this year, the scrip has rallied around 13 percent against a 3.6 percent rise in the benchmark Nifty during the period.

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