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Our view – Equity fund under-performance seems to be still impacting equity business

Overall calculated revenue yield declined 1 bp sequentially despite share of equity moving up: Share of pure equity excluding hybrid in total AUM inched up 13 bps QoQ to 29.5% whereas the share of equity including hybrid moved up 55 bps QoQ to 38.5%. However, overall calculated revenue yield still inched lower 1 bp QoQ to 42 bps.

Pure equity AUM growth at 9.3% YoY is relatively sluggish whereas hybrid fund AUM has done better, growing 17.6% YoY: The 9.3% YoY growth of pure equity fund AUM excluding hybrid funds is relatively lower than the growth for other listed players and a reflection, among other factors, of fund under-performance. Hybrid funds have grown faster but, being smaller in size, take overall equity AUM growth to a still modest 11.1%.

We maintain a less-than-bullish ‘ADD’ rating on UTI with a revised price target of Rs 980: We value UTI at 18.4x FY25 P/E at which it would trade at a FY25 P/B of 3.1x.

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

Revenue: Revenue from operations at Rs 2,900mn was down/up -0.6%/2.2% QoQ/YoY lagging the growth of MF QAAUM at 2.3%/13.3% QoQ/YoY

Share of Equity in AUM: Share of Equity in AUM at 29% up 13bps QoQ but down -110 bps YoY

Channel mix: Share of Banks+ND, MFD and Direct channel was 5%, 28% and 67%, respectively in overall AUM

Operating profit margin: Calculated operating profit margin for the quarter, at 39.2%, was down -160 bps QoQ and -396 bps YoY

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