UTI AMC IPO sails through thanks to retail push, subscribed 2.31 times on final day

Mumbai: The Rs 2,160 crore initial public offer (IPO) by UTI AMC sailed through on the third and the final day of bidding process on Thursday, and was subscribed attracting 2.31 times.

Data from NSE showed the issue received bids for 6,31,02,348, which was 231 per cent of the total issue size of 2,73,50,957 shares. Shares reserved for retail investors witnessed 2.32 times applications while those reserved for HNI investors saw 92 per cent subscription, data from BSE and NSE showed.

The quota reserved for employees and QIBs saw 1.34 times and 3.33 times subscription respectively.
The IPO is being sold in Rs 552-554 price band, with State Bank of India, LIC and Bank of Baroda selling up to 1,04,59,949 equity shares each via public issue, while Punjab National Bank and T Rowe Price International (TRP) divesting up to 38,03,617 equity shares each.

The AMC raised nearly Rs 644.64 crore on Monday through allotment to anchor investors, a day before the scheduled opening of its IPO. The anchor investors included Nomura (Singapore), Goldman Sachs (Singapore), Morgan Stanley Asia (Singapore), ICICI Prudential Mutual Fund and HDFC Mutual Fund, among others.

According to Angel Broking, at the upper end of the IPO price band, the offer quotes at 25.4 times FY20 earnings and 5.25 per cent of Q1FY21 AAUM, demanding Rs 7,024 crore market cap, which the brokerage believes is reasonable.
Listed peers such as HDFC AMC trades at 35 times FY20 earnings while Nippon AMC trades at 37 times FY20 earnings, it said.

Anand Rathi feels that even as the company has underperformed its larger industry peers in recent past, the IPO is priced relatively at a discount of about 30 per cent at the upper price band compared to its industry peers.

"Considering the future growth prospects for the asset management industry and relative valuations we recommend "subscribe for the long term for the IPO," it said.

According to Geojit, the AMC’s IPO valuation seems to be factoring in lower ROE, high competition and uncertainties from the pandemic, and the brokerage recommended subscribing to the issue form a short to medium-term horizon.