UTI Asset Management Company is the second largest asset management company in India in terms of Total AUM and the eighth largest asset management company in India in terms of mutual fund QAAUM as of June 30, 2020, according to CRISIL. As of June 30, 2020 they also had the largest share of the monthly average AUM attributable to B30 cities of the top ten Indian asset management companies by QAAUM as of June 30, 2020, according to CRISIL. They cater to a diverse group of individual and institutional investors through a wide variety of funds and services. They manage the domestic mutual funds of UTI Mutual Fund, provide portfolio management services ('PMS') to institutional clients and high net worth individuals ('HNIs'), and manage retirement funds, offshore funds and alternative investment funds. As of June 30, 2020, UTI AMC total QAAUM for the domestic mutual funds ( Domestic MutualFund QAAUM ) was Rs 1,336.3 billion, while the Other AUM was Rs 8,493.9 billion. With 10.9 million Live Folios as of March 31, 2020, the client base accounts for 12.2% of the approximately 89.7 million folios that, according to CRISIL, are managed by the Indian mutual fund industry. UTI AMC has a national footprint and offer its schemes through a diverse range of distribution channels. As of June 30, 2020, company's distribution network includes 163 UTI Financial Centres ('UFCs'), 257 Business Development Associates ('BDAs') and Chief Agents ('CAs') (40 of whom operate Official Points of Acceptance ('OPAs')) and 43 other OPAs, most of which are in each case located in B30 cities. Company's IFAs channel includes approximately 53,000 Independent Financial Advisors ('IFAs') as of June 30, 2020. Company's banks and distributors ('BND') channel involves distribution arrangements with domestic and foreign banks, as well as with national and regional distributors. In addition, company has dedicated sales teams for institutional and public sector undertaking ('PSU') clients and also offers products directly through the UFCs, digital applications and website. The distribution channels are supported by 459 relationship managers ('RMs') (as of June 30, 2020), who interact with clients and distributors and help generate new business and maintain the existing relationships. Company also has offices in London, Dubai, Guernsey and Singapore, through which they market the offshore and domestic mutual funds to offshore investors who seek to invest in India. Company's clients include domestic individual investors (43.8%), corporate and other institutional investors (45.4%), and banks and other financial institutions (3.5%), Trusts (5.7%) and non -residentIndians ('NRIs') (1.7%) represented the remainder of the Domestic Mutual Fund Closing AUM as of June 30, 2020. They manage 153 domestic mutual fund schemes, comprising equity, hybrid, income, liquid and money market funds as of June 30, 2020. On financial performance front, UTI AMC has posted turnover/net profits of Rs. 1162.75 cr. / Rs. 404.56 cr. (FY18), Rs. 1080.89 cr. / Rs. 311.14 cr. (FY19) and Rs. 890.96 cr. / Rs. 212.76 cr. (FY20). For Q1 FY21, company has posted Rs 271.07 Cr turnover and Rs 65.08 Cr profit. Thus company has posted declining growth over last couple of years. Company has posted an average EPS of Rs. 24.83 and average RoNW of 12.02% for last three fiscals. Issue is priced at a P/BV of 2.48. If we attribute latest earnings of FY20 on fully diluted equity post issue, then asking price is at a P/E of around 26 and if we annualise FY21 earnings, then the asking P/E is 17. So this IPO looks fairly priced. The comparison between peers is shown in above table. On BRLM's front, 7 BRLMs are associated with this IPO, and have handled around 56 IPOs in last three fiscals, and from last 10 IPOs, 4 opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 10 IPOs, 3 are trading below issue price and remaining above issue price. ( As on 25.09.2020 ) As per financials, company's growth is in declining mode (FY18 to FY20), RoNW is 12.02% for last three fiscals and issue is priced at P/E of around 26 as per FY20 and 17 as per annualised FY21. So it looks very fairly priced. Performance of BRLM is average. Future of AMC business is very bright due to high growth prospect of BHARAT. If company is able to sustain good margins like Q1 FY21 and able to increase market share, then in long run, it may give very good returns. So we give SUBSCRIBE rating to this IPO.
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