“We believe that UTI AMC will generate great interest from an investor as AMC’s business has a high RoE and a cash generating business. AMC HDFC is trading at 12.8% and Nippon AMC at 9% June AUM Now, the ultimate demand for UTI AMC would depend on what valuation the IPO requires. A lower valuation than its listed peers would create more demand for UTI AMC, “said Jaikishan Parmar, senior equity research analyst at Angel Broking.
Lot size and probable trading date
The size of the offer or the size of the lot of the UTI AMC issue is 27 capital shares and multiples thereof. Brokers expect the allocation at UTI AMC to be funded on October 7 and listing may occur on October 12.
Here are the key things to know about UTI AMC’s IPO before investing:
UTI AMC’s IPO issue will open for subscription on Tuesday, September 29 and close on October 1. ₹Rs 2,160 crore in the upper price band. After issuance, the promoter’s stake will be reduced from 100% to 69.2%.
UTI AMC’s IPO will see shareholders – State Bank of India, Punjab National Bank, Bank of Baroda, Life Insurance Corporation of India and T Rowe Price International – reduce their stake in AMC by a total of around 30.75%. SBI, BoB and LIC will sell an 8.25% stake each, while T Rowe and PNB will sell 3% each.
According to the draft prospectus, SBI, LIC, BOB and PNB each own 18.24%, while T Rowe has a 26% stake in UTI AMC.
The purpose of the offer is to achieve the benefits of listing the shares on the stock exchanges.
The UTI mutual fund manages 153 mutual fund schemes comprising equity, hybrid, income, liquid and money market funds with a QAAUM or Quarterly Average Assets Under Management of approximately ₹Rs 1.3 million lakh in June 2020.
Through the PMS business, UTI is one of two designated fund managers to manage the EPFO corpus and has also been designated as the fund manager for CMPFO, ESIC and NSDF. “These appointments have resulted in strong growth in their PMS AUM, which were in ₹6,97,050 crore in June 2020, “says ICICI Securities.
According to Crisil Research, UTI AMC had the second highest market share by AUM of PMS services in India (with 44.7%) and the second highest market share by AUM of NPS funds (with 29.2%).
UTI AMC’s total revenues were stable in fiscal year 2017-19, at ₹Rs 1,081 crore in FY19, led by stable QAAUM. In fiscal 2020, total revenue fell 17.6% year-on-year to ₹891 million rupees, due to reduced income from the sale of services and lower gains from changes in fair value. The first quarter of fiscal year 21 showed some revival. Revenues increased 11.4% year-on-year to ₹271 crore.
Risk factor’s
A substantial portion of UTI’s QAAUM national mutual fund is concentrated in a few schemes. “As of June 30, 2020, the top six active equity funds of UTI AMC constituted ~ 75.3% of total QAAUM of active equity funds, while the top five equity funds constituted ~ 98.7% of QAAUM total passive capital funds, “says an ICICI report. Values.
“UTI AMC’s market share has declined steadily in recent years and may continue to do so, which could have an adverse impact on business, financial condition and results of operations,” the HDFC Securities report says.
“Credit risks related to the debt fund portfolio can expose the funds to significant losses, which can have a material adverse effect on business, results of operations and financial condition,” says HDFC Securities.
What the analysts say
Some analysts believe that the issue is attractively priced. “UTI AMC has delivered decent returns and profit margins in recent years with an Mcap to Equity QAAUM of 18% compared to HDFC AMC’s 29%. In addition, earlier this year it awarded ESOP at Rs. 728 / share while its price band is at Rs. 552-554 / share, which means it leaves more money on the table for investors to make profit per listing, “says Nirali Shah, Senior Research Analyst at Samco Securities.
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