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Higher other income and lower employee costs lead to PAT beat

* UTI AMC’s 3QFY26 operating revenue came in at INR3.9b (in line), reflecting a growth of 5% YoY/flat QoQ. Yield on management fees came in at 40.1bp in 3QFY26 vs 42.6bp in 3QFY25 and 41.2bp in 2QFY26. For 9MFY26, operating revenue grew 7% YoY to INR11.6b.

* Total opex came in at INR2.1b, registering a growth of 16% YoY but a decline of 11% QoQ. EBITDA came at INR1.8b (18% beat) in 3QFY26 (declining 6% YoY but rising 21% QoQ), and EBITDA margins stood at 45.6% in 3QFY26 vs 50.8% in 3QFY25.

* Higher other income and lower employee costs resulted in a 17% beat in PAT, which stood at INR1.4b in 3QFY26 (declining 21% YoY but rising 4% QoQ). For 9MFY26, it declined 26% YoY to INR5.2b.

* In our preview, we had included the impact of INR857m related to VRS and labor costs within overall employee expenses, resulting in total costs of INR2.5b. This has now been segregated and presented as an exceptional item to align with the company’s reporting.

* Considering a gradual improvement in flow momentum and adjusting for VRS as well as higher taxation, we expect UTI to report a CAGR of 15%/11%/15% in AUM/revenue/core PAT over FY25-28E. We reiterate our BUY rating with a one-year TP of INR1,400 (based on 17x FY28E EPS).

MF yields continue to dip

*  Overall MF QAAUM grew 12% YoY/4% QoQ to INR3.9t. Equity/ETFs/ Index/Debt funds saw a YoY growth of 4%/16%/23%/10%.

* Equity QAAUM contributed 26% to the mix in 3QFY26 vs. 28% in 3QFY25. Debt/liquid schemes contributed 6%/14% to the mix in 2QFY26 (7%/15% in 3QFY25), while hybrid schemes contributed 7% to the mix (6% in 3QFY25). ETFs contributed 33% to the mix (32% in 3QFY25).

* The MF segment yield dipped to 32bp (34bp in 3QFY25), as the contribution in equity declined. Overall net inflows for UTI were INR58.6b vs. INR102.1b in 3QFY25 and INR57b in 2QFY26. Equity/Liquid outflows for the quarter were INR2.2b/INR7.4b, while Income/ETFs & Index schemes garnered inflows of INR3b/INR65b.

* Gross inflows mobilized through SIPs stood at INR23.9b in 3QFY26, with the SIP AUM increasing to INR447.5b (+17% YoY). Live folios increased slightly to 13.8m as of the end of Dec’25.

* The overall MF AAUM market share declined to 4.9% from 5.1% in Dec’24. UTI AMC’s market share in Passive/NPS AUM was largely stable at 13%/24%. The market share in Equity/Hybrid/Cash & Arbitrage/Debt Funds stood at 3%/ 4%/4%/3% in Dec’25.

* The distribution mix in QAAUM remained largely stable in 3Q, with the direct channel dominating the mix with a 72% share, followed by MFDs at 20% and BND at 8%. However, with respect to equity AUM, MFDs contributed 53% to the distribution mix.

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