UTI AMC soars 15% on heavy volumes, trades at 4-mth high on Tata deal buzz

According to media reports, Tata Group is in talks to buy majority stake in the company from PSU finance entities.

Shares of UTI Asset Management Company (AMC) hit an over four-month high of Rs 890.30, as they soared 15 per cent on the BSE in Monday’s intra-day trade amid reports that the Tata Group is in talks to buy majority stake in the company from public sector undertaking (PSU) finance entities. The stock traded at its highest level since August 18, 2022.

At 12:51 PM; UTI AMC was trading 13 per cent higher at Rs 873.35, as compared to 0.38 per cent rise on the S&P BSE Sensex. The average trading volume at the counter jumped multiple-fold with a combined 3.2 million shares changing hands on the NSE and BSE.

Also read: UTI, HDFC AMC top bets among asset managers; charts hint up to 17% rally 

In the past one month, the stock price of UTI AMC has zoomed 30 per cent after state-owned Punjab National Bank (PNB) announced its plans to divest its holdings in the asset manager. In comparison, the S&P BSE Sensex was up marginally 0.02 per cent during the period.

“The Bank has received approval of DIPAM, Ministry of Finance, Government of India for divestment of Bank's entire/part stake in UTI AMC in single or multiple tranches subject to compliance of Sebi Regulations/other applicable regulatory guidelines,” PNB said in a stock exchange filing on November 24.

UTI AMC is promoted by four PSU sponsors, who collectively own 45.16 per cent. Bank of Baroda, State Bank of India and Life Insurance Corporation of India hold 9.98 per cent each, while PNB holds 15.22 per cent stake. US-based T. Rowe Price International holds another 22.97 per cent stake, the shareholding pattern data shows.

However, in past one year, the stock price of UTI AMC has underperformed the market, by falling 15 per cent, as compared to 8 per cent rise in the S&P BSE Sensex. It hit a record high of Rs 1,217 on August 31, 2021. UTI AMC made its stock market debut on October 12, 2020. The company had raised Rs 2,160 crore by issuing shares at price of Rs 554 per share.

The growth of the industry is expected to be driven by the overall pick-up in corporate earnings; higher disposable income and investable household surplus, an increase in aggregate household earnings and a higher share of financial savings; deeper regional penetration; awareness of mutual funds as an investment vehicle; continuous improvement in ease of investing, with technological innovations and reach owing to a higher internet coverage; positive perception building by the ‘Mutual Fund Sahi Hai’ campaign, amongst others, UTI AMC said in its FY22 annual report.