Buy UTI Asset Management Company, target price Rs 1350: JM Financial

JM Financial has buy call on UTI Asset Management Company with a target price of Rs 1350. The current market price of UTI Asset Management Company is Rs 977.55. Time period given by analyst is a year when UTI Asset Management Company price can reach defined target.

UTI Asset Management Company, incorporated in the year 2002, is a Small Cap company (having a market cap of Rs 12418.63 Crore) operating in Financial Services sector. UTI Asset Management Company key Products/Revenue Segments include Sale of services, Income From Financial Services, Income From Sale Of Share & Securities, Interest, Rental Income and Dividend for the year ending 31-Mar-2021.

Financials
For the quarter ended 31-12-2021, the company has reported a Consolidated Total Income of Rs 308.56 Crore, down 19.50% from last quarter, Total Income of Rs 383.31 Crore and down 11.40% from last year same quarter and Total Income of Rs 348.26 Crore. Company has reported net profit after tax of Rs 126.93 Crore in latest quarter.

Investment Rationale
The brokerage maintains its positive stance on the stock as core fundamental positives are still in place: a) AUM growth story to continue with improvement in equity and debt market share (AUM CAGR of 22% over FY21-24E) and b) improvement in operating profitability driven by cost moderation and increase in top-line revenues aided by non-MF businesses.

UTI AMC trades at a valuation of 15.5x FY24E P/E which is at a discount of 40%/28% to HDFCAMC/ NAM’s valuations. The brokerage expects the future price performance to be driven by a) strong AUM growth driven by superior equity fund performance and renewed focus on distribution and b) improvement in operating profitability driven by cost moderation.