Accumulate UTI Asset Management Company; target of Rs 1400: Prabhudas Lilladher

Prabhudas Lilladher's research report on UTI Asset Management Company

UTIAM saw a weak quarter as core income at Rs1.33bn missed PLe by 20% led by higher staff cost due to VRS related one-time impact of Rs250mn. VRS was implemented w.e.f. 1st Oct’25, to offer exit to eligible employees; 479 are eligible for VRS. Avg. payout would be between Rs6.0-6.5mn. Entire VRS cost will be booked in the P&L in Q3FY26. All eligible employees may not take VRS; we increase staff cost and overall opex by 15%/25% respectively. Due to a combination of higher employee cost for FY26 and lower AAuM growth for FY27/28E led by weak equity performance leading to lower market share, we trim core PAT for FY26/27/28E by 16.5%/3.7%/5.5%. Valuation is at 15x on Sep’27 core EPS suggesting a ~57% discount to NAM.

Outlook

We maintain multiple at 16x and TP of 1,400 but change rating to ‘ACCUMULATE’ from ‘BUY’.