Buy This Asset Management Stock For 21% Upside In 6 Months: HDFC Securities

Renowned brokerage firm HDFC Securities has recommended buying stocks of UTI Asset Management Company Ltd. with a potential upside of 21.2%, within a target period of 6 months.

Target Price

The Current Market Price (CMP) of UTI Asset Management is Rs. 998. The brokerage firm, HDFC Securities Recommends has estimated a Target Price for the stock at Rs. 1210. Hence the stock is expected to give a 21.2% return, in a Target Period of 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 998
Target Price	Rs. 1210
1 Year returns	21.20%

Company performance

Revenue of UTI Asset Management for Q2FY22 stood at Rs.2.80 bn up 40.6% YoY and 7.2% QoQ. Operating profit was up 24% with a margin improvement of 626 bps QoQ. The company has reported higher other income due to strong MTM gain and capital gain from the exit of the Ascent India fund and one Fixed Maturity Plan (FMP) got matured. This has resulted in strong net profit growth of 67.6% YoY and 28.2% QoQ to Rs. 1.99 bn. UTI AMC has posted decent Q2FY22 results with strong bottom-line growth and healthy growth of QAAUM (Quarterly Average Asset under Management).

Comments by HDFC Securities

HDFC Securities said, "We have envisaged a rise of 19% CAGR for both topline and bottom line over FY21-24E. The operating margin is estimated to grow to 54.6% in FY24E compared to the current 35%. Market share trend both in the equity and debt segment will be the key thing to watch out for. The company has been constantly paying healthy dividends to its shareholders. Yield compression due to high competition despite the higher share of equity in total AUM should start to recover or strong inflow could set off the impact."

About the company

UTI AMC is the 8th largest asset management company in India in terms of quarterly average AUM (QAAUM). It has a presence across all AUM segments - Mutual Funds, Alternate Investment Funds (AIFs), Retirement Business, and Portfolio Management Services. The company has been growing its AUM for the last four consecutive quarters on the back of strong performance as well as overall higher flows due to improved market scenario.

Disclaimer

The above stock was picked from the brokerage report of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

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