UTI AMC IPO - Subdued Response - Angel Broking

Mr. Jaikishan Parmar - Sr. Equity Research Analyst, Angel Broking Ltd

"UTI AMC IPO got a subdued response, investor might have concerned about the recent outflow of AUM and subdued response for SIP of the Mutual fund Industry. UTI AMC subscribed 2.31 times on the third day. The retail portion subscribed 2.32 times, QIB 3.34times. However, UTI AMC has the potential to regain its market share and increase return ratio. FY20 profitability was a bit compressed largely owing to a) Decline in management fees of about Rs 52cr due to issues in the debt mutual fund business. b) In some of the high-yield fixed-income funds, fresh subscriptions were stopped and exit load was reduced. C)Marked-to-market (MTM) loss on treasury investments. Board has approved a higher dividend polity which will also help to some extent improve the return ratio. UTI AMC has a well-diversified and strong presence in b 30 cities, where SEBI has allowed to charge additional 30 bps and these inflows are sticky. The company has penetrated well into in the B30 cities as its 250+ development officers and Chief Agents are based in B30 cities. The 24% of its overall AUM in B30 geographies, UTI has the highest concentration in B30 markets among the Top 10 AMCs. UTI AMC has launched its IPO at discount compared to listed peers."

Source : Equity Bulls

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