Listing of UTI AMC & Mazgaon Dock IPO - Angel Broking

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

"UTI AMC IPO got a subdued response, investors might have been concerned about the recent outflow of AUM and subdued response for SIP of the Mutual fund Industry.

However, investors should hold on to UTI AMC owing to a) It has the potential to regain its market share and increase return ratio. b) Board has approved a higher dividend polity which will also help to some extent improve the return ratio. AMC business is an asset-light business, hence investors can expect steady and healthy dividends. c) 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 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. d) Lower valuation compared to listed peers. However, we expect There is a huge growth potential for the MF industry as the penetration of mutual funds is low in India with an AUM/GDP ratio of 12% as of Dec 2019 vs. that of developed countries at >50%. Lower attraction in real estate by investors due to subdued returns will direct investors from physical assets to financial savings, resulting in MF AUM to grow at a healthy rate."

Mr. Amarjeet Maurya - AVP - Mid Caps, Angel Broking Ltd

"Given the valuation and trading at premium on stock exchange ( from upper price band Rs145).we are recommending investors to book the profit. Also considering the current market situation we expect volatility in the market. Hence, investors should wait for stock correction for long term investment."

Source : Equity Bulls

Keywords