UTI AMC IPO - Review & Details | In Depth Analysis By AssetYogi - YouTube

Friends in this IPO season, one more big IPO of 'UTI Asset Management company' is launching

The asset management companies (AMC)

Manage the Mutual Funds & gives

Portfolios management services

Just like this, the UTI AMC is the second-largest asset management company

In this video,

We are going to do an in-depth analysis of the UTI company

First, we will understand the company & business and

Then we see the shareholding pattern, financials, valuation

Competitor's analysis, industry & growth analysis, SWOT analysis and

Then we will see IPO details

This video is going to be in-depth,

Hopefully, after watching this video,

Our decision making will become easier

That whether to apply in UTI AMC or not

Watch the video till the end

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Friends, the easiest way to apply for IPO is through Demat A/C,

As payment can be done online & through UPI

You can watch our detailed video on how to apply to an IPO

We have also made a detailed video on how to open a Demat A/C,

To open your Demat A/c, the link is given in the description

Opening a Demat A/C may take time,

But to apply in upcoming IPOs easily, you should open it

Firstly, we will understand about the Company & its business

They are the 2nd largest AMC in terms of total Asset Under Management (AMC),

It manages a fund of about Rs.9,70,600 Cr.

They are the 8th largest AMC in terms of MFs QAAUM, which is about Rs.1,33,600 Cr.

They manage about 10.9 million folios,

Which is 12.9% of the MF industry

Now we will talk about their businesses

They are in the Domestic Mutual Funds (all mutual funds)

They have mutual funds like equity, debt, hybrid etc

Other than this they give portfolio management services

To the institutions and NHI

They provide PMS services to the govt. institutions also.

Which is a good source of revenue for them

We will go through the whole break-up

They also do pension fund management

From NPS the money goes to the equity, they also manage it

They have offshore funds also from

Where they invest outside India

They also run alternative investment funds

Secondly, they have a strong distribution network

They have 163 UTI financial centres which are run by themselves

They have 257 business development associates and agents,

With 53k independent financial advisors,

They sell their mutual funds through banks and distributors also

They have a dedicated sales team for institutional and PSU clients

Today everyone possesses websites and mobile apps

They also have

They have 459 relationship managers,

International offices for the people who want to invest in India from outside

They have offices in London, Dubai, Guernsey & Singapore

They gain their max revenue from management fees about 73%

This is broadly for the co. and businesses

Now lest understand their promoters and shareholding pattern,

The co. was established on14 Nov. 2002 in Mumbai

It is a professionally managed co.

It has no identifiable promoter

So under its shareholding pattern,

Its maximum shareholders are institutions, shareholders such

As SBI, LIC, Bank of Baroda, PNB, TRP

The TRP is basically, T rows price international.

which is an international co.

You can break up how much % they own

Around 1% is with employees and with the rest it is 100%

You can see the majority shareholder is TRP

Later we will see how much they selling their holdings.

Now we will see their Financials

When we talk about the revenue of 2018-19 the growth of

The revenue

It is a little bit concerning area

Because from 2018 to 19 the growth is -8.66%

In 2020 the revenue falls down to -18.61%

Talking about the net profits reduced to -3.12%

And -22.6% these both are concerning the area

Their return on equity was 15.38% in 2018,

It becomes 13.55% to 9.88% in 2019 which is decreasing

The reason for its decrease is

The SEBI has reduced the total expense ratio

And applied some limits on it, we see it later

In Q1 of 2020 here no. are better,

The return on the networth is 14.19%.

The profit growth is also very decent

At about 40.48% on comparing it with Q1 2019

The revenue growth is also very decent,

So the numbers of the Q1 are very encouraging

Let's see its Valuation If the IPO is launching at a fair price or not

The price to book value according to FY 2020 is around 2.54

And if the final quarter is annualised for the FY 20221 is 2.48

The price to book value ratio of the industry is 11.12

Compared to it is a fairly priced

Its price earning ratio according to FY 2020 is 25.73

The forward P/E of FY 2021 is 17.47

Comparing it with the average of the industry

Only 2 companies are listed in AMC

Which HDFC amc and NIPON amc

Comapring it with HDFC the current PE of the HDFC is 35.17

We can say that it is a fairly priced IPO

This means the valuation is fair better

Now let's see its competitor analysis

And its position compared with other AMCs

The first AMC according to the total asset under management

SBI mutual funds

Till the Last year, the UTI mutual fund under the overall asset management was positioned to be the first

The SBI mutual fund is a step ahead now

According to the asset under management, it comes at 2nd

According to mutual funds, it comes in 8th position

Here you can compare all the top 10 mutual funds

but there are 2 things to be focused

They are most of the business through the PMS institution under the asset under management of govt. institution

They also manage NPS funds so SBI, UTI and LIC

Are the only 3 main players

Under the PMS also the main players are SBI, UTI and NIPPON

The UTI mutual funds gain most of the business from the govt.

Now let's see the rest of the asset under management of it

Its performance under the mutual funds

So according to mutual funds assets under management

in 2014 they were managing assets of 742 billion rupees

You can see at that time their market share was 8.2%

So according to absolute numbers,

The overall 1336742 in comparisons is more

But their market share is falling down

From 8.2 to 5.4 which is a concerning area

So in the mutual funds rest of the AMCs were heading ahead they gain the most from the govt. business

Now let's see the industry and growth analysis

In the upcoming 5 years, the growth of mutual funds is expected to be good

It will grow around 18%

So obviously every players will get benefit from this

Economic growth means everyone will get the benefit

The investor base is also increasing in India

Growing investors household surplus,

The disposable income of the people is increasing

Which will also help in industry growth

With this, the growth expectation of equity mutual funds is more

According to the growth around 22% annual growth rate

The penetration of the equity mutual funds in India is very less

which is only 5%

But in developed countries such as the USA, it is 75%

Canada has 55%, the UK has 40% which has more scope

So according to that the growth estimate of the CRICIL

Of the revenue is up to 13 to 15% of the industry

The net profit growth will be 15 to 16%

The growth of net profit has taken more because in equity mutual funds more growth is expected

The management fees of the EMF is more

This growth has been factored in the SEBIs total expense ratio limit

So it is a fair growth estimate

Now let's see its SWOT analysis Strength, Weakness, Opportunities, Threat

Firstly let's see the strength

It is strong brand recognition

In fact UTI was the first mutual fund in India

And today it is the second-largest AMC in terms of total AUM

So people know the UTI mutual finds

It has reached B30 cities,

This means the next 30 cities to top T30 according to SEBI

It has most of the mutual fund penetration. After that next is B30 cities

There the growth is expected more in the upcoming time

The B30 cities have maximum market share

Today it manages 24% of the AUM comes from B30

The industry average is 12.36% AUM

As you can see it is gaining better revenue from the small cities compared to other industry

So here because it is future growth centres

It has good opportunities for UTI AMC

It has a diverse product offering

when someone went to UTI for investing in a mutual fund, AIF, portfolio management

He can get every type of product under one roof

They have a strong distribution channel

We have seen their numbers all over India they have associates

So they will have no problems if they want to sell any new product

These are the strength, More strengths are strong positions in retirement solution

They gain most from the govt. business

Here UTI is the fund manager of EPFO, CMPFO, ESIC, NSDF

So the portfolio management service AUM has grown very strongly,

In the recent 2 years,

They have grown by an annualised growth rate of 143.9%

They have the highest market share in PMS AUM up to 44.7%

We have recently seen the detail

Second highest market share of

The NPS funds with 29.2% market share

So they have gained most businesses from the govt,

And the growth is also very good in the recent 2 years,

They have experience and professional management.

So these are the strength

Now lest see its weaknesses

It is declining market share in Mutual Funds

Secondly, they have declining revenue and profit growth

We have seen it in financial

So basically the revenue is declining in 2019 and 2020 as well

In Q1 results, we have seen the revenue growth & profit growth

But in upcoming time we have to see

Whether they are sustained or not

But in today's date, it is a weakness

Now if we talk about Return on Net worth, it is also declining

We have already talked,

Previously they were getting 15% returns

But now they are getting 9.88%

But this has improved in this quarter,

We are seeing 14.19% returns on net worth here

Now we will talk about their opportunities

Large & growing MF market in India

We have already talked about that equity penetration is very low in India

It is only 5%, if we talk about equity MF then the prospect of growth is high

And India is a large market

The second is, the high potential in Equity Mutual funds

High growth in Direct Mutual Funds

They get good business from the government funds & NPS funds

If more govt. funds come to manage government funds

Then the UTI & player like SBI can be benefited from it

Increasing digitalisation in India,

In today's date, there are soo many MFs app/products

Because of that, the penetration is increasing,

All these are good opportunities for the MF industry

Now we will talk about its Threats

Firstly we will talk about Total expense ratio,

SEBI has set a limit on it

Equity oriented schemes = 1.05% to 2.25%, i.e. no one can charge funds more than this

This includes management fees, distribution fees, etc.

Limit in other schemes = 0.8% to 2%

So, it has affected the profits of the overall Mutual Fund industry

It can be a threat, as it is a regulated industry & SEBI can bring this type of regulation anytime

Secondly, if we talk about the short term

Then Covid-19 may have an effect on this

But, We have seen the results of Q1 which are okay,

But there was so much business because of the government

Secondly, if the Covid-19 situation continues then equity-oriented schemes/assets are considered risky

If it impacts people's salaries, savings then it will also impact equity-related schemes

Business dependent on market performance,

There are ups & downs in the share market

Their business directly depends on the stock market, so in a way, it is a Cyclical business

Their business can go down at the Recessionary times

So these are the threats

So this was its analysis, now we will see the IPO details

IPO Price = Rs.552 to Rs.554

Here they have book built issue, so to increase our chances of allotment then we should bid on a higher price (Rs.554)

Issue size = Rs2159.88 Cr, it is 100% offer for sale

This is not a fresh issue, which means the company will not get the money, all the shareholders are selling their shares

And the money will go to them, not to the company's growth

But it is a cash-rich organization, if they want to have growth then they are not in shortage of funds

This thing should be clear to us

If we talk about offer

Then SBI, LIC, BOB, PNB, TRP, all are selling their shares

These are the details

Employee reservation = 200,000 equity shares,

So the remaining Net offer = 38,787,081 equity shares

Lot size = 27 shares, we have to apply min. 1 lot

Min. Investment (1 lot) = Rs.14,958

Max. Investment (13 lots) = Rs.1,94,454 in retail category

The object of the issue

1. To achieve the benefits of listing the equity shares on the stock exchanges

2. The sale of up to 38,987,081 shares by

The selling shareholders

So basically it is offer for sale, the company won't get the money

Hopefully, you like this analysis

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