Q3FY21 Result Update - UTI AMC - YES Securities

(Rating: BUY, TP: Rs 689, Upside 24%)

- Q3 FY21 performance was operationally weak with higher employee costs. Higher other income saves the day.

- Equity market share recovering especially driven by fund performance. Rekindling strategy with IFAs and large distributors such as NJ can support this growth further.

- In terms of Debt segment, it could be difficult to regain market share significantly as even NAM will be vying for the same business and with Japanese promoter (perceived to be more corporate governance oriented) backing they have relative better chance.

- New PFRDA mandate for similar AUM and higher revenue yields can lead to profitability improvement. Employee cost as a % of revenue can reduce given the 250+ retirements in the next 3-4 years.

- Overall we expect FY21-23E CAGR in AUM/Revenue/EBIDTA at 16%/21%/46%. RoE can improve from 10% in FY20 to 16% in FY23. Valuations at FY23E P/E of 14x attractive relative to 21x for Nippon and 31x for HDFC

Source : Equity Bulls

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