Citi has downgraded this AMC stock to ‘sell’ and cut target price but…

According to Citi, the pressure on equity flows and higher churn-driving yield pose downside risks to the company’s earnings estimates. It is also a bit concerned about the incremental expense trajectory in UTI International owing to investment in business expansion, for instance in the USA.

The brokerage commentary comes days ahead of the AMC firm’s quarterly results for the October to December 2023 period. In the September ended quarter, the firm reported an 8% decline in profit after tax to ₹183 crore as against ₹200 crore in the preceding fiscal.

Its total revenue from operations had dropped 7% to ₹404 crore during the quarter under review. In the year-ago period, the same was at ₹435 crore.

Imtaiyazur Rahman, chief executive officer of UTI AMC, had then said "With our growing geographical and digital reach in the country and our expertise in investment management combined with a large suite of products, UTI is well placed to capitalise on the opportunities offered by the markets," he added.

UTI AMC traded flat at ₹892.90, 0.03% higher than the previous close, in early deals on January 10 on BSE at 9:20 am. At this price, the stock price is almost 85% higher than the listing price of ₹490.25 on October 12, 2020. In the past year, meanwhile, the stock has given a return of more than 8% as against the benchmark Sensex which has risen over 18% during the period.