UTI Asset Management Company Ltd. share price forecast
The 6 reports from 4 analysts offering long term price targets
for UTI Asset Management Company Ltd. have an average target of 650.00. The consensus estimate
represents an upside of 16.89%
from the last price of 556.10.
Broking. Despite introducing the first phase of upfront peak margin requirement for cash and derivatives, ADTV for cash increased 57.1/-0.8% YoY/QoQ, while derivatives saw a growth of 77.6/38.1%. We expect family-owned smaller scale brokers to cede market share to more organized larger competitors. Strong activity along with market share gain is expected to boost broking revenues. Distribution income is expected to improve as industry active equity AUM grew 8.1/16.4% YoY/QoQ. Commentary around new customer acquisition, new pricing plans, and the impact of regulatory changes will be key to watch. ISEC: We expect ISEC to deliver APAT growth of 77.1/-12.6 % YoY/QoQ. We retain ADD with a TP of Rs 560 (i.e. 23x Sep-22E EPS). Asset management. While active equity has witnessed net outflows of Rs 566.9bn in FY21TD with 3QFY21 accounting for Rs 436.0bn, Nifty-50/Nifty-200 are up 24.3/23.6% just in 3QFY21; this has driven industry equity AUM higher by 16.4% QoQ. Debt schemes continued to receive inflows with 3QFY21 witnessing Rs 1.45tn vs. Rs 818bn in 2QFY21. Higher equity prices are expected to boost treasury profits. Commentary from management around flows and market share will be key. Our top pick in the space is UTIAM. We maintain BUY rating with a TP of Rs 650 (i.e. 20.6x Sep-22E NOPLAT + cash and investments).
We initiate with a BUY rating and a target price of Rs 650 (10% discount to DCF) i.e. FY22/23E EV/NOPLAT of 23.6/18.0x, which is a 37.3/46.6% discount to NAM's target multiples. UTIAM is Indias eighth-largest MF asset manager. Its equity performance is improving (40.6% outperforming AUM, +1,285 bps vs. Mar-20) and market share stabilising (4.7%, +34bps vs. Mar-20), which should drive flows and revenue growth. UTIAM boasts of a strong agency-led granular AUM. IFA/B30 contribute 60.3/24.5% of equity/total assets. We expect FY20-23E revenue CAGR of 7.5% along with improving staff costs (27.0bps of AAUM in FY21E to 21.6 bps in FY23E) to drive operating profits at a CAGR of 13.8%.
UTI AMC, a predecessor of Unit Trust of India, is the second largest asset management company (AMC) in terms of total AUM and eighth largest AMC in terms of mutual fund quarterly average AUM (QAAUM) as on June 30, 2020. As on June 2020, total QAAUM for domestic mutual funds was at | 1,33,630 crore while other AUM was at | 8,49,390 crore. UTI AMC provides discretionary PMS to Employees Provident Fund Organization (EPFO), Postal Life Insurance (PLI), National Skill Development Fund (NSDF) and advisory PMS to various offshore and domestic accounts....
UTI AMC, sponsored by SBI, LIC, PNB and BoB and one of the top 10 AMCs, is the third asset management company to list on the Indian exchanges. Favorable macro tailwinds, which are structural in nature, combined with a reputed brand name augur well for UTI AMC to deliver sustainable growth and profitability. Even though we are positive on the industry prospects from a long-term perspective, we take cognizance of some of the near-to-medium term headwinds. At the upper price band of Rs554/share, the company is being valued at Rs70.2bn. At 25.4x FY20 EPS (trailing), we think the IPO pricing is undemanding given the valuation HDFC AMC and Nippon...
