Nirmal Bang: UTI AMC - IPO Pricing Undemanding; Wary Of Near-Term Sector Headwinds
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Nirmal Bang Report
UTI Asset Management Company, sponsored by State Bank of India, Life Insurance Corporation of India, Punjab National Bank and Bank of Baroda and one of the top 10 AMCs, is the third asset management company to list on the Indian exchanges.
Favorable macro tailwinds, which are structural in nature, combined with a reputed brand name augur well for UTI AMC to deliver sustainable growth and profitability.
Even though we are positive on the industry prospects from a long-term perspective, we take cognizance of some of the near-to-medium term headwinds.
At the upper price band of Rs 554/share, the company is being valued at Rs 70.2 billion.
At 25.4 times FY20 earning per share (trailing), we think the IPO pricing is undemanding given the valuation HDFC Asset Management Company Ltd. and Nippon Life India Asset Management Company Ltd. are currently commanding.
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