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Result Highlights

* Revenue – Management Fees was at Rs.2.4bn was in line with our estimates. Management fees were higher by 29% yoy and witnessed a growth of 11% on sequential basis.

* Yield on Management fees ‐ The Yield on Management fees was at 0.52%, which was a improvement of 4bps YoY, against our estimate of 0.53%.  

* Operating Profit ‐ Operating profit came at Rs.1,056mn which was higher than our estimates of Rs.1,008mn due to lower than expected operating costs and employee costs.   

* Profits – PAT stood at Rs.1,336mn v/s our estimates of Rs.1,472mn led by significantly lower other income offset by stronger operating performance and lower tax rate.  

* Valuations ‐ The stock currently trades at FY23E P/E of 12x.  

* Dividend: The Board of Directors have recommended a dividend of Rs17 per share

Our view:

We remain extremely positive on UTI AMC as 1) Industry AUM growth to be strong double digit, 2) gaining market share in the equity segment, 3) revival in debt market share, 4) impetus from higher yields in the NPS assets. We have raised estimates (6% in FY22, 9% in FY23) to factor in better than expected AUM performance in March 2021 and PFRDA earning boost.

EBIDTA margins to expand significantly from 36% in FY20 to 49% in FY23E, while ROE to expand from 10% in FY20 to 18% in FY23E driven by improved profitability and sustained high dividend payouts (policy of 65%+ payout ratio). Given the FY20‐23E earnings CAGR of 32%, we find FY23E P/E of 12.3x attractive. Retain BUY with a revised 1‐year target price of Rs858 (from Rs786 earlier).

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