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Target: ₹1,050
CMP: ₹742.40
UTI AMC posted in-line 2QFY24 PAT at ₹1.83bn, despite a sequential decline in yields and elevated expenses, amid a lower tax outgo.
However, a consistent loss in market share (total as well as equity) remains an issue. The share in equity AUM dipped to about 4.25 per cent from around 4.47 per cent in June 2023.
UTI AMC is losing market share, mainly in equity funds, but the impact on its revenue yields due to the change in the Securities and Exchange Board of India or SEBI norms remain uncertain. However, even post recent run-up, UTI AMC continues to offer an attractive riskreward ratio. We now believe that the new total expense ratio or TER norms will be applicable only from FY25F and thus we have increased our FY24F EPS by about 40 per cent.
We maintain our Add rating on the stock with a higher target price of ₹1,050, corresponding to 18x FY25F EPS, from ₹1,000 earlier.
Key downside risks: Lower growth and industry related risks
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