UTI Asset Management Company

IPO Size

` 2,160 Cr

Price Band

`552-554 Per Share

Minimum Lot Size

27 Share

Face Value

`10 Per Share

Employee Discount

NA

Retail Allocation

35%

Issue Open Date

29 Sep 20

Issue Close Date

01 Oct 20

Listing Date

12 Oct 20

About the Company:

Unit Trust of India (UTI) Asset Management Company (AMC) is the first asset management company in India with a history of more than 55 years. In order to reach PAN India, the company has established 163 UTI Financial centers, 273 Business Development Associates and Chief Agents and 33 other Official Points of Acceptance. The company has approximately 51,000 Independent Financial Advisors. UTIAMC is a professionally managed company having four sponsors: State Bank of India, Life Insurance Corporation, Punjab National Bank and Bank of Baroda. The company is considered as a global asset management company having T. Rowe Price International Ltd in the list of major stakeholders which is controlling 26% stake in the Company. As per the data from CRISIL, UTI AMC is the largest AMC in India in terms of Total AUM, the seventh-largest AMC in India in terms of mutual fund QAAUM with ?1,542.3 billion, and also has the largest share of monthly average AUM amongst the top ten Indian AMC coming from B30 cities.

Financial Statements:

Income Statement FY20 FY19 FY18
Gross Operating Income 8909.61 10808.94 11627.47
Cost of Employee & Impairment 3427.67 3087.59 3244.46
Other Expenses 1629.3 2435.5 2569.12
EBITDA 3852.64 5285.85 5813.89
Depreciation 313.42 291.47 272.51
Interest 84.76 81.92 87.09
Profit Before Tax 3454.46 4912.46 5454.29
Tax 689.61 1433.19 1403.38
Profit After Tax 2764.85 3479.27 4050.91

Peer comparison (Key ratios):

S.No. Face Value Closing Price as Total Income (FY20) EPS NAV P/E Ratio Return on
    on Sep 21, 2020 (In millions)       Net Worth (%)
UTI AMC 10 NA 8909.61 21.53 217.88 25 9.88
HDFC AMC 5 2,164.55 21,434.30 59.24 189.34 36.54 31.33
Nippon AMC 10 272.6 11,932.10 6.69 42.36 40.75 16.03

Recommendation

As per CA Ajay Chouhan, SEBI Registered Research Analyst, recommendation is to ‘Subscribe’. The Unit Trust of India (AMC) carries a history of 55 years and claims to be generating 41% revenue from PMS and NPS. The company is second largest in terms of Asset under Management (AUM) and eighth largest in terms of Quarterly Adjusted Asset under Management (QAAUM). On the financials front, the company’s Return on Equity stands at 10.3% much lower than the listed peers as HDFC AMC brings 35.5% while NAM India stands at 16.3%. The company is demanding a P/E multiple of 25x considering the FY20 EPS at the upper band of issue price much lower than the (HDFC AMC at 36x and Nippon AMC at 38x), which makes it a must ‘Subscribe’ for listing and short term gains.

Promoter of the Company

The promoter of the company is Government of India.

Peer Comparison

In the unlisted space, the company has number of competitors such as SBI MF, ICICI Pru MF, HDFCAMC, NAM India, ABSL MF, Kotak AMC and Franklin Templeton MF etc. While in the listed space, the rookie AMC will face competition from HDFCAMC, NAM India, IDFC and Edelweiss Financial Services.

Objectives of the Issue

Offer for Sale

The object of the Offer for Sale is to allow the shareholders to sell an aggregate of up to 38,987,081 Equity Shares held by them. The company will not receive any proceeds from the Offer for Sale. Offer for Sale Size is of 38,987,081 Equity Shares making it an amount of Rs. 2,160 crores at the upper price band. The sole purpose of the IPO is to achieve listing gains through disinvestment.