Buy UTI Asset Management Company, target price Rs 950: HDFC Securities

HDFC Securities has buy call on UTI Asset Management Company with a target price of Rs 950. The current market price of UTI Asset Management Company is Rs 686.25.

UTI Asset Management Company, incorporated in the year 2002, is a Small Cap company (having a market cap of Rs 8838.11 Crore) operating in Financial Services sector.

UTI Asset Management Company key Products/Revenue Segments include Sale of services, Income From Sale Of Share & Securities, Lease Rentals, Interest and Dividend for the year ending 31-Mar-2022.


Financials
For the quarter ended 31-12-2022, the company has reported a Consolidated Total Income of Rs 293.39 Crore, down -33.31 % from last quarter Total Income of Rs 439.92 Crore and down -4.92 % from last year same quarter Total Income of Rs 308.56 Crore. Company has reported net profit after tax of Rs 60.01 Crore in latest quarter.

The company’s top management includes Mr.Dinesh Kumar Mehrotra, Mr.Imtaiyazur Rahman, Mr.Flemming Madsen, Mr.Narasimhan Seshadri, Mr.Deepak Kumar Chatterjee, Ms.Dipali Hemant Sheth, Mr.Rajeev Kakar, Mrs.Jayashree Vaidhyanathan, Mr.Edward Cage Bernard. Company has B S R & Co. LLP as its auditors. As on 31-12-2022, the company has a total of 13 Crore shares outstanding.

Investment Rationale
Amongst top AMCs, UTI AMC holds the maximum levers to improve core profitability; however, near-term execution has been disappointing. The brokerage expects the company to deliver 7%/11% revenue/operating profit CAGRover FY22-25E on the back of healthy AUM growth and marginal cost rationalisation. Given its attractive valuation, HDFC Securities maintains its BUY, with a lower TP of Rs 950 (19.5x Sep-24E NOPLAT + Sep-23E cash and investments).

Promoter/FII Holdings
Promoters held 0 per cent stake in the company as of 31-Dec-2022, while FIIs owned 6.26 per cent, DIIs 24.82 per cent.