UTI AMC IPO : Subscribe or NOT?

The data has been compiled from various sources and might have small difference but overall theme is to subscribe or not — we will focus on that

UTI -In top 10 AMC , manages mutual funds, PMS, NPS, AIF and offshore funds

Offer purpose — Offer of sale by existing stakeholders

Key Service domains -Managing domestic mutual funds, PMS, alternate investment funds, retirement unds and offshore funds

Clients -Postal and retiree PMS and NPS services. High concentration in B30 markets segment

Revenues from Key Services–Domestic Mutual funds AUM. PMS and NPS income constitute only 3% although with higher AUM

Risks —

SEBI policy like change in total expense ratio, re-categorization of various schemes, upfront commissions in the past led to lower incomes. Future policy changes can also pose a risk

Large portion (almost 75%) of UTI AMC assets under management in 6-7 active funds, so large scale redemption can be cause of worry

Falling Market share and fall of revenue from operation in last two years is overhang

Financials are on weak foot with ROE mostly 11-13% on an average

Future

Increasing awareness among people about equity investments and growing popularity of Mutual funds can boost revenues

Increasing concentration in B30 Markets segment can boost revenues where they can charge higher TER

Valuations

Optically cheaper valuation as compared to HDFC AMC and NIPPON AMC

Should we apply?

Good chances of allotment.

While valuation, business seems to be in right place but financials are only one thing which leads to– Avoid for IPO subscription

Listing day may see -10% to +10% gains . Recommended to book profits if any on listing day.

Wait and watch policy is best for long term investment in UTI AMC

Also Read

Mazagon Dock IPO crisp summary

CAMS IPO crisp summary –Listing Awaited

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Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.