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Net equity flows turn positive

Our view – Overall revenue yield inches lower sequentially

Revenue Yield - Calculated revenue yield decline sequentially due to deterioration in asset mix: The total QAAUM has grown by 2.9% QoQ and 29.1% YoY. Sequentially all asset segments’ QAAUM have grown for the company except for the relatively high yielding Equity segment. The Equity QAAUM has de-grown by -1.7% QoQ and its share in the total QAAUM is down by -127bps QoQ. This seems to have an adverse impact on the overall revenue yield where the calculated yield was down by -1bp QoQ, at 43bps.

Equity business – Equity net flows turn positive after six quarters of net outflows: The Equity (excl. Hybrid) fund net outflow has turned positive after six quarters and was at Rs 580mn in the quarter. However, hybrid fund net flows were down by -23% QoQ at Rs 9,680mn. SIP gross flows have gone up by 7.0% QoQ but the total SIP AUM was down by -3.8% QoQ. The equity segment market share was at 3.16% in 3Q, down by 16bps QoQ but the hybrid segment market share was at 4.26% up by 6bps QoQ.

We maintain an ‘ADD’ rating on UTI with a revised price target of Rs 1240: We value UTI at 20x FY26 P/E at which it would trade at a FY26 P/B of 3.2x.

(UTI AMC did not host a call this quarter and does so only in even quarters.)

Other Highlights (See “Our View” above for elaboration and insight)

* Revenue: Revenue from operations at Rs 3,754mn was up 0.6%/29.4% QoQ/YoY lagging/leading the growth of MF QAAUM at 2.9%/29.1% QoQ/YoY

* Share of Equity in AUM: Share of Equity in AUM at 27.5% was down -127bps QoQ and -196bps YoY.

* Share of B-30 in AUM: Share of B-30 at 21% was flat QoQ but down by -200 bps YoY.

* Channel mix: Share of Banks + Distributors, MFD and Direct channel was 7%, 23% and 70%, respectively in overall AUM.

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