UTI AMC shares jump 6% today; stock may test 52-week high, say analysts

Shares of UTI Asset Management Company (AMC) rose sharply on Wednesday despite weakness in the domestic equity benchmarks. The stock jumped 6.33 per cent to hit a day high of Rs 904.95 over its previous close of Rs 851.05. The stock eventually settled 3.95 per cent higher at Rs 884.65.

A total of 55,000 shares changed hands on BSE today with a turnover of Rs 4.92 crore. The company's market capitalisation or m-cap stood at Rs 11,232.04 crore.

At today's high level of Rs 904.95, UTI AMC has gained 52.09 per cent compared to its one-year low of Rs 595, hit in June this year. That said, the stock has declined 18.43 per cent from its 52-week high level of Rs 1,109.40.

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The stock has surged 14.57 per cent in the previous five sessions. On a year-to-date (YTD) basis, it has moved 17.65 per cent lower.

Analysts largely viewed the counter as 'positive', suggesting an "extended uptrend". One analyst felt that the stock could hit the Rs 1,100 mark "very soon", while another recommended booking profits at current levels.

Osho Krishan, Senior Analyst- Technical & Derivative Research, Angel One, said, "At present, the stock is placed well above all its significant exponential moving averages and is looking well-versed to continue its rally. As far as levels are concerned, there has been a gradual shift in the support base to Rs 830, followed by the bullish gap of the Rs 780-800 zone. On the flip side, a decisive closure above Rs 900 could only trigger fresh momentum in the counter to reclaim the highs of the current financial year, i.e., placed around the Rs 970-990 zone."

A R Ramachandran from Tips2trades, said, "Amidst speculations that Tata Group might buy a stake in UTI AMC from PSU banks, the stock finds itself at elevated and overbought levels on the daily charts. Rs 894 will be strong resistance. A daily close above this level could lead to an extended uptrend till Rs 1,042 levels. Investors should book profits at current levels or keep a strict stop loss of Rs 802."

In response to the speculations, UTI AMC has said that it is not part of any such negotiations.

Ravi Singhal, CEO, GCL, said UTI AMC can touch Rs 1,100 levels (near 52-week high) very soon. Keep a stop loss of Rs 845, he added.

Manoj Dalmia, Founder and Director, Proficient Equities, said, "Due to high staff costs and a steep increase in operating expenses, UTI AMC reported a difficult quarter with 9 per cent sequentially lower core operating profitability. UTI AMC is one of the top AMCs and has the most levers to increase core profitability; nevertheless, near-term execution is still lacking and is challenging. Expect some buying activity now that the stock has demonstrated a technical breakout, and it might soon reach an all-time high."

Earlier this month, Kotak Institutional Equities initiated coverage on UTI AMC with a 'Buy' rating calling it a self-help candidate.

"We believe UTI offers the best risk-reward in the space, given the healthy fund performance on 3Y/5Y, strong reach (high B-30 share) and maximum visibility among peers to control costs, given the already high base," it said while suggesting a target of Rs 940 on the stock.

Kotak values UTI at 18 times December 2024E EPS. It expects 10 per cent core earnings CAGR over FY2023-25E, led by 15 per cent average AUM growth driving 7 per cent revenue growth and decline in core cost-income ratio.

Three banks -- Bank of Baroda (9.98 per cent), State Bank of India (9.98 per cent) and PNB (15.22 per cent) -- together accounted for a 35.17 per cent stake in the AMC as of September 30. LIC accounts for another 9.98 per cent stake in the asset management company. In total, these four state-run firms owned a 45.16 per cent stake in UTI AMC.

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Meanwhile, Indian equity benchmarks slumped today, dragged by selling pressure in bank, financial, automobile, metal, consumer and energy stocks. The 30-share BSE Sensex tanked 635 points or 1.03 per cent to close at 61,067, while the broader NSE Nifty moved 186 points or 1.01 per cent down to finish at 18,199.