UTI AMC IPO: Favorable headwinds but will the company reap benefit out of it?
UTI AMC, India’s largest Asset Management Company has recently been the third company out of the asset management industry to be publicly listed over the Indian stock exchanges. The industry in recent times has taken rapid strides with India’s mutual funds asset under management (AUM) rose to an all time high of 27.26 lakh crores as of 31st December, 2019 and industry still is poised to grow at more than 15% CAGR for the next five years. The penetration of financial literacy and importance of financial planning is not a prevalent concept in India and people are still learning the importance of channelizing the savings into productive form of investments rather than just piling up cash and potentially losing the purchasing power of money. The macro-economic headwind is favoring the industry but the financial performance of the company has been a cause of concern for one and all. Dwindling financial returns and loss of market share will be one of the major concerns for investors. After considering all of the above, should the investors continue to have patience with the stock, even after it being listed at a discount on the listing day? Or should the investors give space to the company’s counterparts in their portfolio? Or should the stock be kept on the watchlist till the financial performance improves?