Sectoral stocks rally on nod to UTI AMC’s IPO

Mumbai: Shares of asset management companies (AMCs) surged on Tuesday after UTI AMC got approval from the Securities and Exchange Board of India (Sebi) for an initial public offering to raise almost Rs 3,500 crore.

Currently, Nippon Life Asset Management and HDFC AMC are the only two listed stocks in the AMC space. Shares of Nippon Life Asset Management gained 9 per cent to close at Rs 309.10 on Tuesday while those of HDFC AMC ended up 2 per cent at Rs 2,508.60.

Analysts said the penetration of domestic mutual fund industry is low and there is a steady shift of household savings towards financial assets. With more players listing, there is likely to be more interest in the sector although the current listed players are trading at rich valuations, said analysts.

“They are overvalued no doubt and Sebi has been capping the TERs (Total Expense Ratio) of mutual funds, which has a negative effect on asset management companies, and it becomes more of a volume game. However, whenever there is a new listing, especially when there are very few listed players, automatically interest in the sector perks up,” said independent analyst Ambareesh Baliga.

Reliance Securities expects the industry’s AUM to clock 13 per cent CAGR over FY20-FY23 to 32.3 trillion.


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