Indian two thousand and five hundred rupee banknotes are arranged for a photograph in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)
UTI Asset Management Q1 Review - Structural Re-Rating Imminent:
UTI Asset Management Company Ltd. again saw a good quarter with revenue and operating income beat.
Positive revenue deviation was due to higher yields as per new Pension Fund Regulatory and Development Authority rules while other opex included the government’s share of the same.
Opex was higher due to one-time expenses.
Systematic investment plan flows’ market share is improving since the last give quarters.
We see a strong compound annual growth rate in operating income of ~60% over FY21-23E led by a clear visibility of revenue growth, though there may be minor quarterly aberrations in opex.
Given the evident positive delta in core return on equity from 7.8% to 17.5% over FY21-23, valuation discount for UTI AMC should narrow compared to listed.