Latest News
-
Axis Bank Announces Q4 Net Profit at Rs 7,599 Crore Amid Deposit Accretion Worries -
hBits Expands to Pune with CyberCity Magarpatta Acquisition, Eyes Investment Opportunities -
India's First Green Hydrogen Pilot Project Goes Live at Nathpa Jhakri -
DCB Bank Q4 Results: PAT Grew 9% To Rs 156 Cr, NII Jumps 4.5%; Dividend Declared -
RBI Halts New Customer Onboarding at Kotak Mahindra Bank Over IT Compliance -
Macrotech Developers' Annual Profit Triples Despite Q4 Dip -
DoT Engages TRAI for Equitable Satcom Spectrum Allocation Guidelines -
Axis Bank Q4 Results: Net Profit Stood At Rs 7,130 Cr, NII Grew By 11%; Rs 1/Share Dividend Declared -
Infina Finance, Kotak Bank Promoter, Donates Rs 60 Cr to BJP -
ASK Automotive, AISIN Group Announce Joint Venture for Passenger Car Aftermarket
Improved Equity Yields, Buy This Asset Management Stock For Good Return: HDFC Securities
Reputed brokerage firm HDFC Securities has recommended investors to buy the stock of UTI Asset Management Company (UTIAM) for 22% return in 1 year. UTIAM has seen an improvement in equity yields in the last quarter.
Target Price
The Current Market Price (CMP) of UTI Asset Management Company is Rs. 860. HDFC Securities has estimated a Target Price for the stock at Rs. 1050. The stock is expected to offer 22% upside, in 1 year.
| Stock Outlook | |
|---|---|
| Current Market Price (CMP) | Rs. 860 |
| Target Price | Rs. 1050 |
| 1 year return | 22.00% |
Company performance
Revenue was in line with the estimate at Rs. 2.95bn (+4.6% QoQ), supported by better equity yields, which offset lower-than-estimated growth in equity MF AUM. Revenue as a percentage of MF QAAUM improved from 2.5bps to 52.7bps. However, the company's market share dropped 23/13bps to 5.2/5% in the hybrid and active equity category. Also, NPS AUM market share further slipped 24bps QoQ to 27.4% due to lower allocation. Staff costs have significantly dampened the company's profitability.
Comments by HDFC Securities
According to Yes Securities, "Moderating yields and elevated staff costs continue to drag core profitability (EBIT margin at 36%, a five-quarter low). While we draw comfort from management commentary around a buoyant flows environment and a strong growth outlook for the retirement solutions business, we remain wary of continued pressure on yields and staff costs in the medium term. We reduce our APAT estimates by 10-9 % over FY23E-24E to build in higher employee costs. We expect UTIAM to deliver FY21-24E 7% revenue CAGR and 8% operating profit CAGR, as a consequence of strong AUM growth and slight cost rationalization."
About the company
UTI AMC has been managing assets across different businesses. These include domestic Mutual Fund, Portfolio Management Services, International business, Retirement Solutions, and Alternate Investment assets. UTI Mutual Fund has a long & distinguished pedigree, along with a nationwide distribution network spread across the length and breadth of the country. However, the company's core operating profit fell 15% sequentially to Rs. 1bn and APAT fell to Rs. 0.54bn (-58% QoQ, a 64% miss, and the lowest in nine quarters).
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.
