Tepid debut for UTI AMC—shares list at 12% discount over the issue price

• The shares of UTI AMC, listed at ₹490.25, which is at a 11.5% discount to the IPO price band set at ₹552 -554 per share.
  
• However, within minutes after listing, the shares of UTI AMC gained nearly 5.17% of their value and were trading at ₹515.60 apiece at 10:10 am.
  
• The investor pessimism for ₹2,160 crore IPO of UTI AMC already reflected in the subscription number ahead of the listing— the UTI AMC issue was subscribed 2.21 times on the last day of bidding.
  
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It was a tepid debut for the ₹2,160 crore IPO of the mutual fund manager, UTI Asset Management Company (AMC) on the bourses today. The stock, listed at ₹490.25, which is at a 11.5% discount to the IPO price band set at ₹552 -554 per share.

Within minutes after listing, the shares of UTI AMC gained nearly 5.17% of their value and were trading at ₹515.60 apiece at 10:10 am.

The total market cap of UTI AMC rose to ₹6,605.62 crore at 10:10 am. A total traded quantity of 3.09 lakh shares changed hands on BSE, amounting to a turnover of ₹15.74 crore. The company will trade with the symbol of ‘UTIAMC’ on the Indian stock exchanges.

Why did it fail to garner investors’ interest?

The investor pessimism for ₹2,160 crore IPO of UTI AMC already reflected in the subscription number ahead of the listing— the company received the lowest number of subscriptions compared to its other IPO peers Mazagon Dock and Likhitha Infrastructure. The UTI AMC issue was subscribed 2.21 times on the last day of bidding.

Most of the brokerage reports highlighted various vital factors that may impact its business in the near future. According to HDFC Securities report, UTI AMC has a huge reliance on big clients and underperformance by any of these funds may have a disproportionate adverse impact on AUM and thereby income.

As of June 30, 2020, UTI AMCs top six active equity funds constituted 75.3% of total Quarterly Average Assets Under Management (QAAUM) of active equity funds while top five passive equity funds constituted 98.7% of total QAAUM of passive equity funds. UTI AMC has only four liquid and money market funds, the report highlighted.

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