Why Does Prabhudas Lilladher Maintain an ‘Accumulate’ on UTI Asset Management at ₹1400 Target?
UTI Asset Management Company (UTI AMC) has drawn attention after brokerage house Prabhudas Lilladher reiterated its ‘Accumulate’ rating on the stock, setting a revised target price of ₹1400. The recommendation follows a mixed Q2 performance, with core income of ₹1.33 billion missing estimates due to a one-time Voluntary Retirement Scheme (VRS) cost of ₹250 million. Despite near-term profit trimming, the long-term structural outlook remains intact.
UTI AMC’s strong brand recall, diversified client base, and strategic digital initiatives continue to support its market position even as competition intensifies in the asset management sector.
The company’s core profit after tax (PAT) for FY26 has been revised down by 16.5% following the VRS impact. For FY27 and FY28, the brokerage has further moderated its projections by 3.7% and 5.5%, respectively. However, these adjustments are primarily one-off and not indicative of operational weakness. The underlying business continues to demonstrate resilient margins and consistent growth in Assets Under Management (AUM).
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According to the report, while near-term profitability remains muted, UTI AMC’s diversified revenue streams across equity, debt, and hybrid funds, coupled with its growing share in institutional mandates, offer stability. The management’s cost optimization measures, especially post-VRS, are expected to improve operational efficiency from FY26 onward.
The following table summarizes Prabhudas Lilladher’s key findings and estimates for UTI Asset Management:
| Metric | Value / Estimate | Commentary |
|---|---|---|
| Core Income (Q2FY26) | ₹1.33 billion | Missed estimates due to VRS cost |
| VRS One-Time Impact | ₹250 million | Short-term expense, long-term savings |
| PAT Revision FY26 | -16.5% | Post VRS cost adjustment |
| PAT Revision FY27/FY28 | -3.7% / -5.5% | Reflects gradual recovery |
| Valuation Multiple | 15x FY27E EPS | Reasonable vs peers |
| Target Price | ₹1400 | Upside from current levels |
The brokerage also highlighted that despite near-term earnings downgrades, structural profitability and market share gains continue to strengthen UTI’s long-term investment appeal. The management’s decision to streamline workforce costs through the VRS scheme will likely yield benefits from FY26, improving operating margins and enhancing shareholder value.
Valuation remains attractive at 15x FY27E core EPS, which is lower compared to peers such as HDFC AMC (26x) and Nippon AMC (19x). With a strong brand and improving digital traction among younger investors, UTI AMC remains well-placed to capture incremental inflows from both SIPs and institutional mandates.
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With mutual fund penetration still below 10% of India’s population, the sector’s long-term growth potential remains immense. UTI AMC’s strategic partnerships, multi-channel distribution model, and prudent expense management position it to benefit from this evolving landscape. Its diversified product mix and focus on sustainable profitability also mitigate volatility in market-linked revenues.
Analysts believe that investors should treat this phase as a consolidation opportunity rather than a signal of weakness. The brokerage’s Accumulate stance implies potential upside over the medium term, especially once one-time cost effects subside and operating leverage kicks in from FY26 onward.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, highlights that UTI AMC remains a solid player within India’s rapidly expanding asset management industry. While short-term earnings revisions reflect one-off adjustments, the structural story of consistent AUM growth and operational efficiency is intact. Long-term investors can accumulate gradually, focusing on valuation comfort and stability.
Discover more data-driven investment insights and expert guidance at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on UTI AMC
- Why Did UTI AMC’s Profit Miss Estimates This Quarter?
- How Does the VRS Scheme Affect Future Earnings?
- Is UTI AMC Attractively Valued Compared to Peers?
- What Is the Long-Term Outlook for Mutual Fund Companies?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
