UTI AMC IPO: Consolidated Brokerage Views

This post on UTI AMC IPO attempts to bring out consolidated brokerage views , subscription information, Grey Market Premium (GMP) and anchor investor information where applicable. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to UTI AMC IPO or not.

Related Posts : UTI AMC IPO Review

UTI AMC IPO: Grey Market Premium etc.

  • 28-09-20 GMP Rs. 40-45

UTI AMC IPO: Anchor Investors

UTI AMC garnered ~ 664 crore through allotment of 1,16,36,124 equity shares to 67 anchor investors at the upper price band of Rs 552-554. The anchor investor list looks good and includes Miirae, ICICI, AB Sunlife, Sundaram, HDFC, Goldman Sachs, Nomura, HSBC, Kotak, Elara, Edelweiss, BNP Paribas, Max Life, JM Financial, Relince, Canara, Morgan Stanley, Avendus,, Mahindra etc. List of anchor Investors

Subscription: UTI AMC IPO ( x times)

Day / X timesQIBNIIRetailempTotal 
Day 33.340.932.321.342.31
Day 20.480.351.150.660.79
Tot Applications  ~ 880650
Appl wise Retail1.75 x

Consolidated Brokerage Views on UTI AMC IPO

Angel Broking :”At the upper end of the IPO price band, it is offered at 25.4x its FY20 earnings and 5.25% of Q1FY21 QAAUM, demanding Rs. 7,024cr market cap, which we believe is reasonable. Further, listed peers like HDFC AMC trades at 35x FY20 earnings and Nippon AMC trades at 37x FY20 earnings. Additionally, HDFC and Nippon AMC trade at 12.56% and 8.55% of Q1FY21 QAAUM, respectively. Considering attractive valuation, huge growth potential of MF industry, asset-light business and higher dividend payout ratio, we are positive on this IPO and rate it as SUBSCRIBE.”

Capital Market : ” Score 40/100 ; HDFC AMC is trading at P/E multiple of 33.0 times FY2020 EPS and a P/BV multiple of 10.4 times. Nippon Life India Asset Management Company is trading at PE multiple of 37.5 times and P/BV multiple of 5.7 times. UTI AMC is valued at Rs 7024 crore at upper price band and is offered at 5.3% of M-cap/Average AUM, compared with Nippon Life India AMC trading at 8.6% of M-cap/AAUM and HDFC AMC at 12.6% of M-cap/AAUM. UTI AMC’s lower valuation is fully justified given its track record, over dependance on government mandated and retirement funds fetching low margins and lack of any attractive feature in an overcrowded industry. Indirect control of government (with attendant bureaucratic and labor-related hassles, slow decision-making and reduced flexibility) in a competitive and performance-oriented industry is also a negative factor”

Dalal Street journal: “At the higher end of the price band of Rs 554, the issue is valued at 25.18 times its FY20 earnings per share of 21.53, which seems to be cheap compared to other listed players that are available at around 38 times its FY20 earnings. The market cap to sales (FY20) will come around 8.5 times compared to peers that are available at more than 20 times. Even if we take the market cap to MF AUM of the company, it is demanding 5.25 per cent compared to its peers available at more than nine per cent. Hence, we believe that the issue is attractively priced and the readers can ‘invest’.”

Emkay: “At the current price band, UTI AMC has priced its IPO at around 4.6 per cent of total FY20 AUM (around 26 times Price/FY20 earnings) with around 10 per cent FY20 RoE. Peer comparisons are NAM India which is trading at 7.4 per cent of FY20 AUM (37.3x P/FY20 earnings) and HDFC AMC which is trading at 8.2 per cent of FY20 AUM (37.5x P/FY20 earnings). Considering relatively weaker return ratios and unfavourable AUM mix, UTI AMC is expected to be at a discount to its peers. Hence, the valuation discount by UTI AMC IPO is justified and remains attractive considering the gradual improvement in cost parameters.”

Geojit: “Company’s FY20 ROE stands at 10.3% which is much lower than its peers (HDFC AMC-35.5% and Nippon Life-16.2%). However, at the upper price band of Rs.554, UTI AMC is available at P/E of 25x FY20,which is cheaper compared to its peers (HDFC AMC-36x, Nippon Life-38x). Based on the upper price band, the Market cap to MF AUM for UTI stands at 5.3% compared to HDFC AMC-12.6% and Nippon Life-8.6%. Additionally, they have huge business of PMS & NPS,which accounted for 41% of Q1FY21 revenue. We believe that the IPOprice is after factoring lower ROE, highcompetition and uncertainities from pandemic.Accordingly, we recommendSubscriberating on a short to medium-term basis, expecting listing gain.”

SMC: “Score 3/5 ; India is a large market and every AMC has enough scope to scale up their operations, despite the completion in the industry. In the past we have seen the two listed AMC have delivered very good returns and the restively attractive valuations of UTI AMC compared to the other two listed players makes it even more attractive. It won’t be wrong to say that the Equity culture in India is still at a developing stage and UTI being one of the oldest AMC is likely to generate good returns for investors both from the medium term as well as long term.”

SP Tulsiyan Website: “In view of contracting profit margin, structured objects of fresh issue, client concentration risk and unattractive pricing, one can give the UTI AMC IPO a miss.espite industry tailwinds, UTI AMC faces declining market share and weak profitability with no immediate rebound visible. Thus, citing weak fundamentals, the issue is an ‘avoid’.”


Standard disclaimer: I am not a SEBI registered analyst /investment adviser and above infoimration is collated from various online sources and is for educational purpose only. Please visit indidivual brokearge sites to read the actual reports. Please donot make ypur investkent decisions based on this info as it is not completre amd exhaustive. Please do your own due diligence as stock market investments have high degree of inherent risk.

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