UTI top pick within listed AMC stocks: ICICI Securities

Out of the 4 listed AMC stocks in India, the top pick for brokerage and research firm ICICI Securities is UTI AMC with a buy coverage. The brokerage sees a 31 per cent upside potential in the stock.

“Despite factoring higher yield drop of 5 bps over FY 22-24, keeping costs estimates flat 1.6 per cent CAGR between FY 22-23 and assigning lowest multiple within listed AMC space, UTI provides the maximum upside in our coverage universe (31%),” ICICI Securities said in a report.

UTI is also likely to outperform in terms of EBITDA (CAGR of 6.2% for UTI AMC vs 1% each for HDFC AMC/NAM between FY22-24E).

The brokerage in its report also stated that flows into MF schemes remained positive at the aggregate level with positive flows across equity (excluding index funds) as well as debt of Rs 59bn/110bn in Aug ’22. The positive flows in debt are noteworthy as it happened after a hiatus of nine months
According to ICICI Securities, key takeaways from the performance of listed AMCs:

• HDFC AMC has been a steady performer in its key equity schemes. Midcap fund has seen a meaningful turnaround.
  
• Nippon Life Asset Management (NAM) small cap fund’s (~17% of equity AUM) performance rose from Quartile 2 to Quartile1 while midcap has moved from Quartile 1 to Quartile 2. Largecap has been a steady outperformer.
  
• UTI has been an underperformer in its key schemes – large cap and flexi cap
  
• ABSLAMC’s large cap fund has been in Quartile 2 for the past 5 quarters while other key funds like flexi cap have moved from Quartile 1 to Quartile 4 and ELSS has remained in Quartile 4 for a long time.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)