Target: ₹970

CMP: ₹776.25

UTI AMC (UTIAM) is India’s eighth largest AMC (on QAAUM basis) with a 5.98 per cent market share, and the second largest in terms of assets (Rs 14.45tn) managed. Given UTIAM’s strong legacy and brand image, it has a higher market share in retail AUM (7 per cent).

Since Q1-FY22, UTIAM’s overall/equity net inflows have largely been positive (barring Q1-FY23), facilitating market share gains. Also, a superior performance has shored up its SIP inflow share to above 4 per cent currently vs. 2.9 per cent in Mar’20.

While MF revenue yields are set to remain under pressure, we expect gradual opex efficiency (28.8bps in FY25 vs 31.6bps in FY22) to help sustain PAT yields around 23-24bps in FY24E/FY25E. We expect about 15 per cent earnings CAGR over FY23-FY25.

We believe it is a good time to accumulate UTIAM as a play on financialisation of savings given its undemanding valuations (about 46 per cent/19 per cent discount to HDFCAMC/NAM).

Initiate with Long with a Mar’24 TP of ₹970 set at 18x FY25 EPS.

Key risks: Adverse trends in equity markets, opex efficiency taking longer than expected time

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