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    UTI AMC

    UTIAMCGood
    Financial Services·26 Apr 2024
    Management Summary

    UTI AMC delivered a strong performance in FY24, characterized by significant AUM growth and a sharp rise in consolidated net profit, largely aided by mark-to-market gains on investments. Core profitability showed healthy momentum with a 22% QoQ increase in Core PAT. Management highlighted yield improvements across categories and a strategic focus on expanding their footprint in B30 cities and digital platforms.

    Highlights

    8
    • Consolidated Net Profit for Q4 FY24 stood at ₹163 crore, up 90% YoY but down 12% QoQ.

    • Consolidated Revenue from operations for Q4 grew 38% YoY to ₹416 crore.

    • Total Group AUM reached ₹18.48 lakh crore, a 19% increase from the previous year.

    • Consolidated Core PAT (excluding MTM gains) for Q4 was ₹96 crore, up 68% YoY and 22% QoQ.

    • Equity QAAUM for the quarter stood at ₹84,777 crore, rising 20% compared to Q4 FY23.

    • The company distributed ~100% of its FY24 profits as dividends, including a special dividend.

    • SIP AUM witnessed a significant growth of 42.95% YoY, reaching ₹30,747 crore.

    • UTI Retirement Solutions manages 25.8% of the NPS industry AUM with ₹3.03 lakh crore.

    What Changed1

    vs Q2 FY25

    Guidance items5 → 4 (-1)

    Key financials

    Single quarter

    05 metrics
    1. 01Consolidated Revenue from Operations₹416 Cr+38%YoY
    2. 02Consolidated Net Profit₹163 Cr+90%YoY
    3. 03Consolidated Core PAT₹96 Cr+68%YoY
    4. 04Total Group AUM₹18.48L Cr+19%YoY
    5. 05Equity QAAUM₹84,777 Cr+20%YoY

    Segment breakdown

    AUMAUM Growth
    UTI Retirement Solutions Ltd.₹3.0L Cr25.7%
    UTI International₹27,645 Cr27.4%
    UTI Alternatives Pvt. Ltd.
    Heatmap· 2 shared metrics

    Guidance & targets

    4
    CategoryTargetPriority
    Other
    Effective Tax Rate
    22%-23%
    Medium
    Margin
    Standalone Blended Yield Benchmark
    34 bps
    High
    Margin
    Equity and Hybrid Fund Yield
    76 bps
    High
    Headcount
    Standalone Employee Expense Growth
    2%-3%
    Medium

    Risks & concerns

    4
    RiskSeverity

    Redemption Pressure in Equity/Hybrid

    Analysts noted pressure on net sales and redemptions in equity categories despite gross sales of ₹2,981 crore.Analyst acknowledged

    medium

    Market Volatility Impact on Fair Value

    A significant portion of FY24 profit (₹500 cr) came from fair value changes, which are subject to market fluctuations and may not be repeatable.Both acknowledged

    medium

    International Yield Volatility

    Yields in the international business have been volatile due to asset mix changes and redemptions in flagship funds like IDEF.Analyst acknowledged

    low

    Areas of Evasion(1)

    • Shareholder-level stake sale progress

    Q&A highlights

    3

    “In fourth quarter, since we are not required to pay any commission as the one-year period has already ended, that has also improved our AMC yield under the equity and hybrid category.”

    Explains that the yield improvement is sustainable as the mandatory one-year trail commission for B30 business mobilized before the SEBI ban has finally rolled off.

    asked by Swarnabha Mukherjee, B&K Securities

    2 min read5 chapters

    Detailed Narrative

    01

    Yield Dynamics and B30 Commission Roll-off

    Management reported a notable improvement in yields across fund categories. Equity and hybrid yields improved by approximately 5 bps sequentially to ~76 bps. This was primarily driven by the cessation of the one-year additional trail commission for B30 business mobilized prior to February 2023, as mandated by SEBI. CFO Vinay Lakhotia confirmed that 34 bps is the appropriate blended yield benchmark to start FY25.

    02

    Mark-to-Market Gains Drive Profit Surge

    The massive jump in consolidated net profit from ₹99 crore in FY23 to ₹500 crore in FY24 was largely attributed to net gains on fair value changes. With a consolidated investment book of ₹3,833 crore, the company benefited from a ~29% return in the NIFTY during the fiscal year. Management cautioned that while these gains significantly impact the P&L, they are market-dependent, leading to the focus on 'Core PAT' which grew 22% QoQ to ₹96 crore.

    03

    Strategic Expansion in B30 Cities and Digital Infrastructure

    UTI AMC continues to leverage its strong presence in 'Beyond-30' (B30) cities, which account for 21% of its AUM and 33% of its total folios. The company opened 29 new branches in Tier-2 and Tier-3 cities during the year. Simultaneously, they consolidated all digital assets under the 'UTI HART' platform and introduced a 3-in-1 self-service digital KYC process to cater to nearly 0.6 million transactions per day.

    04

    Subsidiary Performance: Retirement and International

    UTI Retirement Solutions remains a powerhouse, managing ₹3.03 lakh crore in AUM (25.8% market share of NPS) and recording a 16% YoY increase in PAT to ₹54 crore. UTI International also saw 27.4% AUM growth, reaching ₹27,645 crore. The company recently obtained a license from French regulators to operate in the European region through its Paris office, which is expected to create significant business opportunities without incurring further major expenses.

    05

    Dividend Policy and Capital Allocation

    The company reaffirmed its policy of paying a minimum 50% dividend. For FY24, the payout was exceptionally high at nearly 100% of profits, including a special dividend. This reflects management's commitment to returning capital to shareholders in a year of strong mark-to-market gains, while maintaining a healthy balance sheet for future growth initiatives like the planned Multi Cap Fund launch.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.