UTI AMC's Q2 FY25 Financials Show Positive Growth, But Challenges Remain.

Net Profit Margin (NPM) – Quarterly: Lowest at 44.4 % in the last five quarters.The company’s profitability is declining due to higher expenses.

Return on Equity (ROE) – Annually: Lowest at 10.5 % in the last three years.The company’s profitability is lower compared to its peers in the finance/NBFC industry.

UTI Asset Management Company (UTI AMC) has recently announced its financial results for the quarter ended September 2024. The company has shown positive performance in this quarter, with a score of 10 compared to 19 in the previous quarter.

One of the key highlights of the financials is the company’s high dividend payout ratio of 78.12%, which has been consistently growing over the past five years. This indicates that UTI AMC is distributing a higher proportion of its profits as dividends to its shareholders.

In terms of net sales, the company has recorded its highest figure of Rs 538.40 crore in the last five quarters, showing a positive trend in its sales performance. Similarly, the profit before tax (PBT) has also shown a growth of 29.9% compared to the average PBT of the previous four quarters. The profit after tax (PAT) has also increased by 21.8% compared to the average PAT of the previous four quarters.

However, there are some areas where UTI AMC needs to improve. The company’s operating cash flow has been consistently declining, with the lowest figure of Rs 325.12 crore in the last three years. This indicates that the company’s cash revenues from business operations are falling.

Moreover, the net profit margin (NPM) has also been on a downward trend, with the lowest figure of 44.4% in the last five quarters. This is due to the company’s higher expenses, which have impacted its profitability. Additionally, the return on equity (ROE) has been the lowest at 10.5% in the last three years, indicating that UTI AMC’s profitability is lower compared to its peers in the finance/NBFC industry.

In conclusion, UTI AMC has shown positive financial performance in the quarter ended September 2024, with a high dividend payout ratio and growth in net sales and profits. However, the company needs to address its declining operating cash flow and profitability in order to improve its overall performance. Based on these factors, MarketsMOJO has given a ‘Hold’ call for UTI AMC’s stock.