UTI Asset Management Company Ltd IPO Review

My view on UTI Asset Management Company Ltd IPO –

IPO Price – ₹552 to ₹554 per equity share
Last date – Oct 1, 2020
Proposed listing date – Oct 12, 2020
Minimum bid quantity – 27 shares
Minimum bid amount – ₹14958

Incorporated in 2002, it is an asset management company. Company earns by charging management fees from the clients to manage their funds. So, the larger the size of AUM (Asset Under Management), the more the revenue they get. Company is mainly dependent on government for earning. They have got most of their business from government schemes only.

Profit after tax is positive but it has been decreasing since last few years. Recent quarter result is good, but we can’t say whether company can continue this performance or not.
The AUM is continuously declining over the years. This has resulted in a decrease in revenue.
At higher price band, company is valued at PE of 26. And industry PE is near 35. So IPO is valued at attractive price.

My view on IPO –
I am not fully confident whether to apply in this IPO or not. If market sentiment is good, and IPO is oversubscribed. Then in that case, I may consider applying on last day. But I don’t expect huge listing gains. If market supports, then we can expect a listing gains of approx 25%.

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