UTI AMC has emerged as a compelling story in the Indian asset management landscape, with Motilal Oswal maintaining its ‘Buy’ recommendation and a 12-month target price of Rs 1,550. The brokerage highlights a significant turnaround in fund performance, robust SIP inflows, expanding digital and regional reach, and a diversified product suite as key catalysts for future growth. Despite industry headwinds such as yield compression from passive flows, UTI AMC’s operational resilience and strategic initiatives are expected to drive a 17% CAGR in AUM, 13% in revenue, and 20% in core PAT over FY25-27. Investors are advised to consider UTI AMC as a strong portfolio candidate, with a clear upside potential from current levels.

Motilal Oswal’s Investment Thesis: BUY with a Target of Rs 1,550

Motilal Oswal maintains a BUY rating on UTI AMC, setting a one-year target price of Rs 1,550, implying a 26% upside from the current market price of Rs 1,230. This valuation is based on 19x FY27E EPS (28x Core EPS), reflecting confidence in the company’s earnings trajectory and re-rating potential.

Key Stock Levels and Investor Targets

Current Market Price (CMP): Rs 1,230
Target Price (TP): Rs 1,550 (12-month horizon)
Upside Potential: +26%
Valuation Multiples: FY27E P/E at 19x, Core P/E at 28x
Dividend Yield: 3.9% (FY25), rising to 4.7% by FY27E.

Fund Performance: Marked Improvement and Market Share Revival

UTI AMC’s equity fund performance has seen a remarkable turnaround in the last five months, with approximately 70% of equity AUM ranking in the top two quartiles on a one-year return basis as of May 2025, compared to just 25% in the preceding year. This improvement is expected to revive equity market share, which has stabilized at 3.9% over the past seven months, despite a previous dip.

Product Innovation and Diversification

Recent product launches—including the Quant Fund (Q4FY25) and Multi-Cap Fund (April 2025)—are poised to support equity inflows, while ongoing traction in hybrid funds and thematic offerings further strengthens UTI AMC’s market positioning. The company’s leadership in passive investments is underscored by a 23% YoY jump in ETF and index fund assets, with passive AUM now contributing 34% to the overall mix.

SIP Growth and Digital Penetration

Systematic Investment Plan (SIP) AUM surged 22% YoY to Rs 375.9 billion, with SIP inflows rising 23% YoY to Rs 83.3 billion in FY25. Notably, nearly 48% of equity/hybrid gross sales were mobilized through digital platforms in Q4FY25, reflecting successful digital integration and marketing automation. UTI AMC’s digital transformation, including the ‘UTI Buddy’ and ‘UTI HART’ platforms, has enabled effective cross-selling and upselling, driving incremental growth.

Expanding Regional Footprint: B30 Cities Outperformance

UTI AMC continues to deepen its presence in B30 (beyond top 30) cities, with 22% of monthly average AUM in March 2025 originating from these regions—well above the industry average of 18%. The addition of 68 branches in Tier-2 and Tier-3 locations during FY25 has driven net folio additions of 0.9 million, underlining the company’s commitment to financial inclusion.

Yield Dynamics and Profitability Outlook

Overall yields stood at approximately 34 basis points in Q4FY25, with equity and hybrid funds generating around 75bp. However, the growing share of passive flows (ETFs/index funds at 5–6bp) is expected to cause a marginal yield contraction of 1-2bp, partially cushioned by distributor commission rationalization. Despite this, UTI AMC’s core profitability remains robust, supported by cost controls and operational leverage.

Financial Performance Snapshot (FY25-27E)

Strategic Growth Drivers: Passives, International, and Alternatives

UTI AMC’s leadership in passive investments, expanding international business (with a global AUM of Rs 253.8 billion), and the scaling up of alternatives (AUM up 34% YoY) are expected to be key growth engines. The company’s strong position in the National Pension System (NPS) segment, with 24.86% industry AUM share, and ongoing expansion of its Point of Presence operations further enhance its long-term prospects.

Risks and Valuation Discount

Despite the robust outlook, UTI AMC trades at a discount to peers, reflecting market caution over yield compression and the evolving asset mix. However, Motilal Oswal sees this as an opportunity, given the company’s improving fundamentals and re-rating potential. The stock’s FY27E P/E of 19x and dividend yield approaching 5% provide a margin of safety for long-term investors.

Bottomline: Investment Rationale and Recommendation

With a diversified portfolio, improving fund performance, digital and regional expansion, and a strong balance sheet, UTI AMC stands out as a high-conviction BUY for investors seeking exposure to India’s asset management growth story. The 12-month target price of Rs 1,550 offers a compelling 26% upside, supported by robust earnings growth and attractive valuations. Investors are advised to accumulate the stock at current levels, with a view to benefit from both capital appreciation and rising dividend payouts.