Buy UTI AMC; target of Rs 1040: Motilal Oswal

Moneycontrol • 4 days ago

Original source

Key Investment Pillars

  • UTI AMC's yields on management fees have improved to 39.6bp, driven by a diversified product portfolio and healthy SIP inflows.
  • The company has maintained its cost discipline, with total opex down 14% YoY, resulting in an EBITDA margin of 47.7%.
  • UTI AMC plans to launch its first SIF, a hybrid long-short strategy, in 3QFY27, which will help broaden its product suite.
  • The company's SIP book has a relatively mature investor base, with SIP closure at 70% compared to approximately 80% for the industry.

Thesis Validation Checklist

  • Investors should watch for improvement in fund performance, particularly in the flexi-cap category, which has seen mixed flows but improved performance over the past three months.
  • The company's ability to maintain its cost discipline and improve its yields will be crucial in driving earnings growth.
  • The launch of new products, such as the SIF, and the expansion of its distribution network will be key to driving AUM growth.
  • Investors should also monitor the company's market share in the mutual fund industry, which has declined slightly to 4.6%.