Buy UTI AMC; target of Rs 1040: Motilal Oswal

What happened

Motilal Oswal reiterated a BUY rating on UTI AMC with a one-year target price of Rs 1,040, based on 24x FY28E core EPS. UTI AMC's 2QFY27 revenue was INR4b, up 2% YoY, while profit after tax was INR1.3b.

Confirmed

Global impact / market context

Motilal Oswal raised its earnings estimates by 9% for FY27 and 3% for FY28, citing better management fee yield and cost efficiency. This means the broker expects UTI AMC to keep more profit from each sale, which supports its higher target price.

Analyst inference

UTI AMC's EBITDA margin, which means the share of revenue left after operating costs, rose to 47.7% from 38.1% a year earlier. Total operating expenses fell 14% YoY, showing cost cuts drove the profit beat rather than a sharp jump in revenue.

Analyst inference

What to watch

1. Watch whether UTI AMC's yield on management fees, which came in at 39.6bp versus 38.6bp in 1QFY27, holds near this level in coming quarters. Confirmed
2. Motilal Oswal's target of Rs 1,040 rests on 24x FY28E core EPS, so any change to those earnings estimates would likely change the target price. Proposed
3. Watch whether the 14% YoY fall in total operating expenses repeats, because further cost savings would support profit, while a rebound in spending could pressure margins. Analyst inference

Evidence

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