UTIAMC - UTI Asset Management Company Limited Share Price

The management of UTI Asset Management Company provided a positive outlook during the earnings conference call for the quarter and financial year ended March 31, 2025. Key highlights include:

1. Financial Performance:

   • Core revenue from operations for FY '24-'25 reached Rs.1,445 crores, a 22% year-on-year growth.
   • Core profit after tax increased by 43% to Rs.492 crores, while overall consolidated net profit stood at Rs.731 crores, down 5% year-on-year due to market fluctuations.
   • In Q4 FY '25, the core revenue was Rs.360 crores, up by 13% year-on-year, and core profit after tax was Rs.98 crores, rising 2% year-on-year.

2. Assets Under Management (AUM):

   • Total AUM for UTI Group reached Rs.21.05 lakh crores, marking a growth of 14% from the previous year.
   • Quarterly average mutual fund AUM as of March '25 was Rs.3.4 lakh crores, reflecting a 16.8% year-on-year increase.

3. SIP Growth:

   • SIP assets grew by 24.5% year-on-year to Rs.13.35 lakh crores as of March '25, with monthly SIP contributions rising by 34.5% year-on-year to Rs.25,926 crores.

4. Market Expansion and Digital Strategies:

   • UTI AMC added 68 new branches in Tier-2 and Tier-3 cities, with a focus on enhancing digital access and investor education.
   • The launch of multiple funds, including the UTI Quant Fund and thematic funds, has enabled broader market participation.

5. Future Strategies:

   • Management plans to sustain growth by developing diverse strategies across different fund offerings, targeting ongoing retail investor education, and optimizing operational efficiencies.
   • A predicted stable core profit margin, despite rising operating costs, was emphasized.

The management expressed confidence in capitalizing on India's economic trajectory and expanding retail participation in the mutual fund sector, aiming to enhance investor engagement and satisfaction.

Here are the major questions and their detailed answers from the Q&A section of the earnings transcript for UTI AMC:

1. Question: "Can you explain your strategy if you would launch new NFOs in Financial Year "˜26?" Answer: We recently secured regulatory approval to launch a multi-cap fund, which opened for subscription from April 29 to May 13. Beyond that, we do not anticipate any major launches in diversified equity funds. There may be some ETFs and index funds added based on demand, but no other diversified equity NFOs are currently planned.

2. Question: "What was the reason for the high tax rate in Q4?" Answer: The increase in the tax rate for Q4 was primarily due to changes in the deferred tax liability caused by restructuring tax benefits under the recent budget. This change resulted in an increase of around 2.3% in our tax rate for the quarter.

3. Question: "How should we see the yields going forward? What are the yields for different segments for the quarter?" Answer: Our book yield is about 75 basis points for equity and hybrid funds; equity and index funds yield around 5-6 basis points. Cash yields are at 9-10 basis points while income funds stand at 22-23 basis points, averaging around 34 basis points overall. We anticipate a possible dilution of 1-2 basis points in yields due to growing ETF AUM.

4. Question: "Is the increase in Opex due to only NFOs?" Answer: The operating expenses jumped because we opened over 91 new branches in the last 15 months, which included renovation costs recognized this quarter. However, on a year-on-year basis, other expenses increased by only around 6%, showing controlled costs despite the branch expansion.

5. Question: "Is the decline in AUM for UTI International due to M-to-M losses?" Answer: Yes, the decline is mainly due to mark-to-market impacts from our key funds, particularly UTI Innovation Fund and UTI Dynamic Equity Fund. However, we are optimistic with increasing interest from institutional investors looking to invest in India.

6. Question: "Can you give insight into employee costs for FY '26?" Answer: For the standalone entity, we expect employee costs to rise by 250-300 basis points in FY '26, despite a 7-8% annual wage hike. On a consolidated level, we project a 400-500 basis points increase due to growth and expansion across subsidiaries, especially UTI International and UTI Pension Fund.

7. Question: "What has been the flow trajectory of existing schemes aside from NFOs?" Answer: We've seen positive traction, especially in our hybrid funds, resulting in good net sales. Our large and mid-cap funds also performed well. Hence, while NFOs contributed positively, existing schemes have shown favorable movement too.

8. Question: "Can you explain the increase in RTA payouts?" Answer: The rates for RTA payouts are standardized across the industry. Our payout levels reflect industry standards, and we continuously evaluate the performance to align with market trends and practice.

9. Question: "Can you clarify the mark-to-market impacts on UTI International's financials?" Answer: The majority of the mark-to-market impact arose from our investments in UTI Innovation Fund and Dynamic Equity Fund, compounded by currency fluctuations. The consolidated figures reflect these dynamics, with a smaller impact noted in the AMC's balance sheet.

10. Question: "What are your plans to sustain strong performance over the long term?" Answer: We have a robust investment strategy encompassing various fund styles to adapt to market cycles. This diversified approach allows us to consistently offer competitive options to investors while guiding them based on performance expectations over time.