Buy UTI Asset Management Company; target of Rs 992: ICICI Securities

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Modest growth in MF AAUM: UTI's MF AAUM is expected to grow at a CAGR of 9.4% over FY26-28E, driven by a mix of organic and inorganic growth.
  • Cost discipline: The company has demonstrated cost discipline, with a standalone opex CAGR of 2.6% over FY26-28E, which is expected to support margin expansion.
  • Subsidiaries' performance: While the subsidiaries have not contributed meaningfully to the overall consolidated core PBT, they are expected to improve gradually, with a modest average annual contribution of INR 0.9bn to profit.
  • Valuations: The stock's valuation remains attractive at ~11x FY28E core PAT, making it a buy.

Thesis Validation Checklist

  • Sustainable fund performance improvement: Investors should watch for signs of sustained improvement in fund performance, such as consistent returns and growth in AUM.
  • MF AAUM growth: A growth in MF AAUM, driven by a mix of organic and inorganic growth, would validate the thesis.
  • Cost discipline: The company's ability to maintain cost discipline and support margin expansion would be a positive sign.
  • Subsidiaries' performance: Any improvement in the subsidiaries' performance would be a bonus, but not a key driver of the investment thesis.