Buy UTI Asset Management Company; target of Rs 1300: Prabhudas Lilladher

Prabhudas Lilladher's research report on UTI Asset Management Company

UTIAM saw a soft quarter as core income missed PLe by 7% led by higher opex. Revenue yields were in-line at 42.2bps (PLe 42.4bps) as AMC yield was stable QoQ at 33.9bps. Equity performance in 1-yr bucket has been consistently improving since Mar’24, and 59% of equity AUM is in quartile 1 & 2 as of Mar’25. A dilution of 1-2bps is expected in yields which will be cushioned by commission rationalization carried out in Q4FY25. Staff cost is guided to grow by 3%/5% at the standalone/consol level; we envisage other opex to grow at an 11% CAGR over FY25-27E.

Outlook

Due to operating leverage, opex/AuM could fall from 24bps to 21bps over FY25-27E, which would translate to a core PAT CAGR of 15%. Stock is valued at 10.5x suggesting a 62% discount to NAM. We tweak multiple to 16x and TP to 1,300 as we roll forward to Mar’27 core EPS. Retain ‘BUY’.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

UTI Asset Management Company - 05052025 - prabhu