Earnings Outlook
Weak equity market performance to hit UTI AMC's Oct-Dec net profit
This story was originally published at 19:42 IST on 25 January 2025
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By Christina Titus
MUMBAI – Sluggish growth in equity assets under management is likely to hit the net profit of UTI Asset Management Co. in the quarter ended December, according to analyst estimates. Decline in 'other income' due to a weak equity market performance is expected to drag the asset management company's net profit down, analysts said.
The standalone net profit of the fund house is expected to fall 26.6% on quarter to INR 1.48 billion, according to the average of estimates from five brokerages. However, on a yearly basis, the net profit is expected to see a mere 1.7% drop. Among the brokerages, Kotak Institutional Equities had the highest estimate for the net profit at INR 1.67 billion and Nuvama Wealth Management Ltd. the lowest at INR 1.17 billion.
Nuvama Wealth estimates other income to decline by 93.8% on year and 94.0% on quarter. Motilal Oswal Financial Services sees it falling 73.9% on year and 75.0% on quarter.
For the September quarter, the company reported a net profit of INR 2.01 billion, up 8.3% on quarter. On a yearly basis, the net profit rose 50%. The stock has moved up nearly 2.2% since the announcement of the September quarter result. The shares have risen over 44% in the current financial year but are down over 16% from the peak of INR 1,403.65 recorded on Dec. 12. On Friday, the asset management company's shares ended 3.4% lower at INR 1,172.60 on the National Stock Exchange.
Standalone revenue from operations for the Oct-Dec quarter is expected to rise 8.9% on year to INR 3.77 billion. However, revenue is estimated to fall 9.5% on a sequential basis. Motilal Oswal sees the sequential revenue growth remain flat as yields are expected to be at stable levels. The company posted revenue from operations of INR 4.17 billion in the previous quarter.
Most brokerage firms see overall assets under management of the company slowing down compared to its peers due to a decline in the share of equity assets. Motilal Oswal said the market share of many schemes has fallen, which would result in only marginal growth in assets under management for the December quarter. The assets under management of the company stood at INR 3.50 trillion as of Sept. 30 with equity assets contributing 78% to the total average assets. The contribution of equity assets was INR 1.02 trillion at the end of September.
The company is scheduled to announce its earnings on Tuesday. Management's commentary on new asset class, distributor's commission payouts, cost control, equity assets under management and equity net inflow market shares, and yields will be keenly watched for the quarter, according to Nuvama Wealth.
Following are the Oct-Dec earnings estimates for UTI Asset Management Co. based on reports from five brokerage firms in descending order of the estimate of net profit:
| Brokerage | Net interest income (in INR million | Net profit (in INR million) |
| Kotak Institutional Equities | 3,724.00 | 1,666.00 |
| YES Securities (India) Ltd | 3,803.00 | 1,625.00 |
| Motilal Oswal Financial Services Ltd | 3,776.00 | 1,612.00 |
| Prabhudas Lilladher Pvt Ltd | 3,790.00 | 1,316.00 |
| Nuvama Wealth Management Ltd | 3,761.00 | 1,167.00 |
| AVERAGE | 3,770.80 | 1,477.20 |
End
Edited by Ashish Shirke
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