UTI Asset Management Company Limited (UTIAMC) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the UTI Asset Management Company Limited Q1 FY '27 Earnings Conference Call. From the management, we have with us Mr. Vetri Subramaniam, Managing Director and Chief Executive Officer; Mr. Vinay Lakhotia, Chief Financial Officer and Head, Corporate Strategy; and Mr. Sandeep Samsi, Head, Investor Relations, Marketing and Corporate Communications. We also have the Investor Relations team from Adfactors PR. Please note that this conference call is being recorded. Before we begin, I would like to mention that some of the statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. Please note the disclaimer mentioning these risks and uncertainties are on the disclaimer slide of the investor presentation that has been shared earlier. I will now hand over the conference to Mr. Vetri Subramaniam for opening remarks. Thank you, and over to you, sir.

Yes. Good evening, everybody. Thank you for joining us today. Our financial results presentation and press release have already been shared on the stock exchanges as well as our website, and we trust you've had the opportunity to review them. Joining me today is familiar faces, Vinay Lakhotia, CFO and Head of Strategy; and Sandeep Samsi, Head of Investor Relations, Marketing and Corporate Communications. Before we discuss the quarter, I would like to briefly touch upon 3 areas, but I'll keep it very brief because I'm sure all of you are familiar with this. One is the macroeconomic environment. Second is the progress UTI AMC is making against our strategic priorities. And finally, why we remain confident about our long-term growth trajectory. The markets in the first quarter of '27 witnessed a resilient domestic economy despite global uncertainty. While geopolitical developments and evolving trade dynamics continue to impact market sentiment, India's growth story has remained intact. This could be distinctly seen in the mutual fund industry data, which continued to demonstrate strong structural resilience during the quarter with average AUM reaching INR 84,18,486 crores in June 2026, registering a robust year-on-year growth of approximately 12.6% from the same period in June 2025. Also, there's healthy retail participation reflected in the industry's investor portfolio base expanding to nearly INR 28 crores, sustained systematic investment plan contributions and continuous financialization of household savings reinforce our confidence in the long-term growth opportunity for the asset management industry. Against this backdrop, I just thought it's a good time once again to remind you of our Mission 2031 strategy to transform UTI AMC into a larger, more competitive technology-enabled and crucially an investor-centric organization. Our strategic priorities remain firmly anchored around 5 key milestones: accelerating the AUM growth, strengthening our SIP franchise, expanding our distribution reach, deepening digital capabilities and above all, delivering better outcomes for our investors. With that, I'm pleased to highlight that the first quarter reflects encouraging progress across each of these priorities. Our mutual fund franchise continued to build reach and momentum during Q1 FY '27, supported by healthy investor participation across retail and institutional segments. As our business approaches the INR 4 lakh crore quarterly average AUM milestone, our focus remains not only on growing with the industry, but on consistently improving our competitive position and increasing our share of industry assets through disciplined execution and investment excellence. As of 30th June 2026, our mutual fund franchise continued to strengthen with quarterly average AUM reaching INR 392,691 crores, contributing to UTI AMC's total group AUM of slightly over INR 20 lakh crores. We remain particularly encouraged by the improving quality of our asset mix with equity assets across both active and passive strategies accounting for 70% of our average mutual fund AUM compared to the industry's equity to nonequity mix of 62:38 reflecting our continued focus on long-term wealth creation. Our investor franchise also continued to expand. We added approximately 3.89 lakh folios, taking our total life portfolio base to INR 1.42 crores -- we also added 2.51 lakh new investors as measured by their PA as of 30th June 2026. This has been supported by one of UTI AMC's enduring competitive advantages that continues to be the breadth of our distribution franchise with presence in 699 districts across India. During the quarter, we further strengthened our engagement with banks, national distributors, MF distributors and wealth partners through focused fund manager interactions, distributor education programs and data-driven sales initiatives. We believe that expanding our reach beyond the largest cities will remain a significant driver of future growth as mutual fund penetration deepens across the country. A key indicator of the strength of our franchise continues to be the momentum in our SIP business. SIPs remain a key driver of sustainable growth with our gross SIP inflows of INR 2,502 crores during the quarter and SIP AUM increasing 8.05% year-on-year to INR 45,595 crores. At the same time, our digital capabilities continue to gain traction with digital purchase transactions reaching 60.9 lakhs in June 2026 from 49.14 lakh in June 2025. A year-on-year increase of 23.93%, underscoring the growing adoption of digital platforms, and this once again speaks to our ability to engage investors across channels. While these numbers are encouraging, we view them as milestones in a much longer journey. Our focus remains firmly on building sustainable market share and strengthening the quality of our growth rather than optimizing for any single quarter. One of the most encouraging aspects of our business, which I already referred to earlier, is that nearly 70% of our average mutual fund assets are now equity oriented reflecting our continued emphasis on long-term wealth creation. This is a combination of active and passive investments and reflects the choice of the customer. Investment excellence remains the cornerstone of our strategy. Our product development philosophy has always centered on delivering differentiated investment solutions rather than simply expanding the number of SKUs, we continue to identify structural opportunities where our investment capabilities can create long-term value for investors. During the quarter, our fixed income franchise delivered consistent investment performance supported by a revenue and credit portfolio with no rating downgrades, our liquid fund reached a new milestone in assets under management. At the same time, we are significantly expanding our passive investment franchise through a strong pipeline of index and ETF offerings, enabling investors to participate efficiently in evolving sectoral thematic and long-term structural opportunities while addressing changing investment preferences. Alongside our disciplined investment approach and robust risk management framework, we continue to support investment outcomes across asset classes. This positions us well to benefit from this subsidized shift of household savings towards financial assets. Based on this momentum, we continue to make meaningful progress in strengthening our international and our passive investment franchise. Our passive product strategy for the international market remains on track. And we advanced our global product pipeline through the discussions that we have for an emerging market strategy and also for a good city outbound product initiative, and you will hear more on this through the rest of the year. We also continue to deepen engagement with global asset managers, distribution platforms and thematic ETF providers. We also hosted our first U.S. institutional roadshow to showcase our private credit capability given our strong track record over our 2 funds where we have now returned capital to investors. These initiatives reflect our long-term commitment to expanding UTI AMC's global footprint, broadening our investment offerings and creating additional avenues for sustainable growth beyond our domestic franchise. Our alternatives business continues to build momentum. We strengthened our private equity platform or an unlisted equity offering with the appointment of a dedicated Head of Private Equity. We have also progressed on our GIFT City retail initiative in collaboration with our domestic and international teams. And as I mentioned earlier, you will hear more about this later during the year. We also launched our second multi-opportunities fund, MOF II and continue to see strong investor interest in structured debt opportunities in 4, which is the point we launched earlier this year. This has secured commitments of approximately INR 900 crores as of 30th June 2026. These developments reinforce our strategy of building a diversified alternatives platform with multiple growth engines across private credit, private equity and also offering these solutions to international clients. Our pension business continues to make meaningful progress in advancing financial inclusion and expanding social security, across under segments. During this quarter, we achieved an industry-first milestone by signing the country's first-ever memorandum of understanding between a pension fund and a farmer producer organization, strengthening retirement awareness across the farming community. We also expanded our presence across the MSME ecosystem with strategic partnerships with industry-leading body and continue to deepen our rural outreach by onboarding agriculture and cooperative banks and engaging with primary agricultural credit society, Tencent groups, tea plantation workers and booming life communities. These initiatives reflect UTI's commitment to broadening pension access and supporting India's long-term retirement savings ecosystem and speak back to the origins of UTI more than 60 years ago. Further, customer engagement and digital transformation continue to be key focus areas during the quarter. We strengthened our direct investor engagement model with the launch of our customer experience channel in Mumbai, providing dedicated relationship management to some of our customers. Our AI-powered voice assistant VAANI continues to transform customer servicing and now handles over 60% of inbound calls, improving both responsible and operational efficiency. Additionally, our digital marketing partnership with Google has expanded us to reach over INR 10 crores unique individuals over the past 9 months. significantly expanding our engagement with India's potential investor days. Together, these initiatives are helping us build stronger investor relationships, enhanced customer experience and drive long-term business growth. As we continue to focus on disciplined execution and operational efficiency, the organizational initiatives undertaken over the past year have created a leaner and more agile operating model. enabling us to support higher business volumes while maintaining cost discipline. Our objective is to generate sustainable operating levels as we continue to invest selectively in areas that strengthen our long-term competitive position. As we look ahead, our priorities remain clear. While 1 quarter does not define long-term success, we believe the progress made during the first quarter reinforces the strategic direction we have set for the company. The investments we have made in people, technology, products, distribution and operating efficiency are creating a stronger and more scalable organization. as India's asset management industry continues to benefit from favorable structural trends, we believe our company is well positioned to participate meaningfully in the next phase of industry growth while creating sustainable long-term value for our investors and shareholders. With that, I will now request Sandeep to take you through the operational and financial performance of the company in greater detail.

Thank you, sir. I will now speak about UTI AMC's operational and financial performance during the first quarter ended 30th June 2026. UTI AMC financials on a stand-alone basis. The core revenue that is the sale of services amounted to INR 308 crores, stable at Y-o-Y and up by 1% on a quarter-on-quarter basis. The core EBITDA stood at INR 171 crores for the first quarter of FY '26, '27, up by 1% Y-o-Y and 20% Q-on-Q. The core profit after tax for the quarter 1 FY '26, '27 is INR 119 crores, up by 1% Y-o-Y and 72% quarter-on-quarter. The shareholders of the company has approved a final dividend of INR 40 per equity share at the Annual General Meeting held on 21st July 2026, representing 95% of the payout ratio. On a consolidated basis, the core revenue that is [indiscernible] amounted to INR 379 crores, stable at Y-o-Y and up by 1% Q-on-Q. The core EBITDA stood at INR 178 crores for the first quarter of FY '26, '27, up by 3% Y-o-Y and 21% Q-on-Q. The core profit after tax for quarter 1 of FY '26, '27 is INR 129 crores, up by 6% Y-o-Y and 31% Q-on-Q. On UTI Pension Fund Limited, our 100% owned subsidiary UTI Pension Fund Limited has recorded a year-on-year growth of approximately 13% in a [indiscernible] reaching approximately INR 4.31 lakh crores as on 30th June 2026 as compared to INR 3.81 lakh crores as of 30th June 2025. It currently manages approximately 24.16% of the NPS industry AUM as compared to 24.67% at the end of quarter 1 FY '26. On UTI International, UTI International which represents our international business as an AUM of approximately USD 1.48 billion, which is INR 14,027 crores as on 30 June 2026. Our international clients are spread across more than 30 countries and our primarily introduction, pension, insurance companies, banks and asset managers. Our flagship India dynamic equity fund domiciled in Ireland has an AUM of approximately USD 511.56 million, which is INR 4,839 crores as of 30th June 2026. On UTI alternative, as of 30 June 2026, UTI. alternatives as an AUM with a total commitment of all active funds, including the 4 investment portfolio manager of INR 3,843 crores which is an increase from approximately INR 2,679 crores in June of 2025. We have an AUM of USD 206 million as of June 2026 across 2 pooled vehicles in GIFT City, India Opportunity Fund I and India Opportunity Fund II, which access feeder funds for MOF I and [indiscernible] respectively. UTI alternatives currently manages 6 active funds across performing credit and multi-strategy teams. The UTI structure Debt Opportunities Fund III has an AUM of approximately INR 609 crores as compared to INR 615 crores as of June 2025, and the fund is currently in the investing stage. UTI SDOF IV launched in quarter 2 of FY '26 and planned at INR 1,500 crores fund with the INR 500 crore greenshoe option has currently an AUM of approximately INR 887 crores. UTI Multi Opportunities Fund 1 has an AUM of approximately INR 1,599 crores and is currently in the investing stage. UTI Multi opportunities fund II started marketing in quarter 2 of FY '26 and is planned as a INR 1,000 crores fund with INR 1,000 crores of greenshoe auction. It currently has an AUM of INR 321 crores as of 30 June 2026. UTI Real Estate Opportunity Fund I is a total commitment of INR 189 crores as compared to INR 147 crores as of June '25, remains in fundraising and investing stage. As of 30th June 2026, UTI AMC's PMS AUM stood at INR 12,15,000 crores, while EPFO and AUM was at INR 10,63,000 crores the implementation of the revised EPS mandate and consequent transfer of assets led to a decline of INR 3,16,000 crores in the PMS AM on a quarter-on-quarter basis. Overall, the quarter reflects continued improvement in the quality of our earnings, a healthy growth trajectory across our core businesses and disciplined execution against our strategic priority. I would now request the Managing Director and CEO for his concluding remarks.

Thank you, Sandeep, for sharing a detailed operational update with everybody. I think we can now open the forum for question and answers.

[Operator Instructions] The first question is from the line of Uday Pai from Investec.

I have a couple of questions. First is, can you share the yields across equity hybrid ETF and liquid for the quarter? And this quarter, we see in your financial that there is no noncontrolling interest line item [indiscernible] 0. So why -- what is the reason for that? And the third question would be the net flows that we see in ETF, is there a contribution from EPF money also? Or is it pure retail HNI category flows. And lastly, if I can squeeze one, what's the dividend policy going forward?

Yes. And for the equity and hybrid fund is close to around 72 basis points, 72, 73 basis points. ETF and index fund is around 8 basis points. Cash and arbitrage fund at around 12. And for the fixed income fund is around close to around 20 basis points. So that's on [indiscernible] part. On the noncontrolling we had investment in 2 of our AIF fund SDOF II and SDOF III where because of the controlling interest and because of accounting standard, we were required to consolidate their balance sheet with UTI AMC, but since SDOF II has already returned the money, and SDOF III we have sold a part of our stake, then for this particular quarter, the fund the consolidation was not required to be carried out in our balance sheet and the noncontrolling interest, which represent the other shareholder interest in that particular fund has actually come down. So that's on the noncontrolling part? And what was the third question?

Net flows in ETF. The ETF net flows is there a contribution from EPFO, or is it retail?

Yes, I mean, we don't comment on specific customer flows. I can't answer that question, but I would just say that in that fund inflows, which is a we significantly retain, we're significantly positive for the quarter.

And dividend policy, any color on that?

I think we have been maintaining a very healthy payout ratio of the corporate to inactive 95%. I think Hopefully, that will continue.

[Operator Instructions] The next question is from the line of Mohit Mangal from Centrum.

My first question is I wanted to know the impact of [indiscernible] have we taken the hit or [indiscernible] .

Mohit as you can see from our number, there are no dilution as far as the margins are concerned. So basically, whatever the impact of the changes have been there, we have passed on the impact to all our intermediaries and there is no impact on our margin number as such.

Okay. That's great. My second question is a.[indiscernible]

I'm sorry to a sir, your voice is not very audible. Would you use your handset

Is this better?

Yes,

Yes. So on the net flows, I think if I have to look at your equity schemes, 3 bigger schemes, [indiscernible] , large-cap and mid-cap. Just wanted to know. I mean, qualitatively, was there any redemption pressure? Or how were the flows in this segment in the schemes?

So the net sales number, which we have already published that. There have been some redemption pressure under our [indiscernible] category. But large and mid-cap, we have been receiving quite a positive inflow. In fact, in [indiscernible] fund as well, the [indiscernible] inflows have been encouraging -- but while the overall number -- the net sales numbers are negative in [indiscernible] fund but there are gross sales in that particular fund and large and mid-cap fund has been doing very well as far as net inflows are concerned.

Right. My last question is towards the PMS. So I think in your opening comments, you said that we had to transfer some amount with respect to EPFO money. -- and therefore, there has been a decline. So for the entire year, how should we look at the PMS fees?

So the impact is very marginal in terms of fees, and that has already been factored into our -- this particular quarter financial numbers. There is no meaningful impact on the fee number for the PMS on account of this transfer.

Understood. Lastly, in terms of the international business, I think [indiscernible] .

I'm sorry, sir, your voice is breaking up again.

Is this better now?

Yes. No, I'm sorry, so it's again breaking up. We are not able to hear you, sir.

Yes. Is this better now?

Yes.

Yes. So my last question is on the international business. So basically, we are seeing some kind of pressure over the last 2 to 3 quarters. So I mean, I understand that because the global uncertainty and other factors as well. But how should we look in terms of this business going forward?

So from our point of view, the international businesses essentially an international sales and distribution business. for the investment management capabilities that we already have in India. So it's the same team that's effectively able to manage the products, which are then getting distributed in different geographies, almost about 38 plus geographies where we have licenses or the product is registered and licensed for sale. What you are seeing in terms of the flows over the last, I would say, actually, almost 2 years, combination of both the lack of appetite for India, I should actually say negative sentiment towards India. And the fact that our own scheme has strangled in terms of performance over the last few years. So that's the reason why the flows are negative. But I see that as essentially a cyclical issue. At some point, you will see interest in India come back. And I think the scope for India to attract money as an individual geography as opposed to being just a part of a global pool. We see that trend already. And I think that will only accentuate is retain the structural growth path. And therefore, we think there is a great opportunity for us as an India-based manager with local investment management capabilities to capture a share of that market rather than allow that to accrue only to the global firms who actually don't necessarily have much on-ground fund management present.

[Operator Instructions] The next question is from the line of Divij Punjabi from Banyan Tree Advisors.

I had 3 questions. The first was like we were discussing some time ago that there was at to diversify focus away from the top 2, 3 equity and hybrid funds into the other funds as well. so that across cycles, the AUM is more consistent. So can you just comment on how that effort has been progressing so far?

Okay. You want me to answer that, we air. So I would say that is well underway, and that's reflected in the past that now the team is actually focused. And I would say there's also demonstrated their own capability in terms of being able to push the gross across a whole host of funds rather than it be limited to just a few historically, what we may have called flagship schemes. So I think this [indiscernible] part in not earlier. If you look at the larger midcap fund, that is actually the funding which we are having maximum traction at this point of time. And based on the month, I think we are pushing almost 3% to 3.5% in terms of our share of net sales on that strategy. At the same time, in a strategy like [indiscernible] , which has been challenged, I think team has done a great job of communicating the positioning of that strategy, the potential inflection points. And therefore, even though we've lost money because of redemptions, they've actually managed to increase the SIP pipeline over there. So I think that strategy is underway. It's a continuous sort of learning experience for the team to sort of push them on lose. But I think we are on the right track in terms of being able to get the benefit of a diversified set of products to reflect in our sales numbers. And even in Augusta challenge strategy for us in the pure mid-cap fund, actually the team has managed to talk in a positive net sales number year-to-date. So I think it just speaks to the ability of the team to engage and be able [indiscernible] diversified suite of products and similar would apply even in hybrids. I think in hybrid, our net flow sometimes don't reflect what the team is doing because we've got 2, 3, what I would call, sunset products, which are just sort of running off, but outside of those, something like the aggressive hybrid, et cetera, again, we've been consistently averaging 2% to 3% of industry net sales over there. So we are continuing to push the team to engage on multiple products with the old sales architecture, distribution architecture.

I'll just put the other 2 questions also forward. One is around the employee count. So sequentially, we are seeing that the employee count has gone up by or so. So kind of if you can explain that. And the other 1 is, is there any consideration around the buyback within the cash that is there and given the price of the stock?

Yes, on the employee count, our numbers have remained fairly stable. As we had mentioned that earlier also when we had given the numbers came down, and we have only replaced people where there was a need. So we have not replaced all the people who have taken VRL. so I'm not sure about the number of employees increase that you're seeing. Are you talking from a cost point or are you talking from an absolute number point?

Absolutely member last quarter of Q4, the total employee count was 1,435 and this quarter, it is 1,512.

So that is the consolidated number, which also includes the people that we have in the pension funds as well as in the alternative business. So as Vetri also mentioned in his opening comments, we are investing in all of these businesses, and therefore, we have recruited people for sales in the different subsidiaries. But in the asset management, the number remains fairly stable.

Divij , we highlighted earlier as well that for UTI Pension Fund Limited we are expanding our capabilities into the private pension business, where we have a significant number of recruitment are happening, plus on the UTI alternative side, also, we are building capabilities in terms of food strategy, both on the private equity as well on the real estate point. The subsidiary, the headcount number has increased. But on the stand-alone entity, which is the mutual fund business, where the numbers are actually slightly lower only.

Just to give you some color on the AMC side, honestly, it's a belief based on the way we look at the sizing of the organization but honestly, there's no reason for the number to go up unless something is dramatically either in terms of our thought process or industrial architecture or distribution architecture. So you should not see the AMC number go up. Pension fund again just to reiterate, actually know that the numbers will go up dramatically over the next 2 years, but that's just a function of the growth that we are seeing and we think we can fund that growth quite comfortably without any profitable bank when you look at the pure pensions on company members. So over there, we will actually significantly expand the workforce over the next 18 months. We actually approved it for them, go back in October, November '25. So I think they will almost more than double their headcount over the next year, 1.5 years.

Sure. And lastly, on buybacks.

No, there is no proposal that we are considering at this point in time. It's not on the table.

The next question is from the line of Shreya Simple from Nomura.

My first question was on the Mission 2031 strategy. any quantitative metric or targets that we have set for ourselves in terms of, let's say, distribution or capabilities. If you could expand on that, please first?

So I think as far as we listen 2031 targets are concerned, and we think there is scope for us to manage 2 of current in because we've already made all the commensurate investments that we would use in terms of sort of people, technology, et cetera, of course you has some sort of upgrade cycles in all of this. But otherwise, we are well staffed to be able to do that. So that's pretty much, I would say, on target. We need to ramp up our flow market share in equity because our flow market share in equity is significantly lower than our stock of AUM market share in equity products. So that remains the focus area in terms of the numbers that we need to take up. I think over there, our current sort of double down on SiP, recognizing the fact that we've got some weak performance and redemptions in some of the large scheme. So that's why we've been doubling down on SIPs. But at some point of time, we think cycle will be more favorable. We are also calling out on enhancements on process people within investment management. So I think at some point, when we are able to get better performance numbers, we'll be able to take up that number in a more cyclical fashion. So -- that's where we are in terms of making sure, but the bigger thought process, flow market share eventually needs to exceed stock market share. That's the only way we are going to be able to get to the targets we have set out for ourselves. Meanwhile, use every other tactics, whether it is SIP, whether it is other products, whether it is passive, to kind of keep the engagement with the entire distribution architecture and continue to meet whatever investment growth that customers have and whatever products they might want to be able to achieve this.

Understood. Just 1 follow-up on that. When an investor thinks about UTI AMC. What are the unique selling points? What are the USPs that you want an investor to think about when they think of the UTI AMC as a front house.

At a very tough 1 because some level, sometimes I think the [indiscernible] campaign paints all of us with the same brush so it sometimes gets difficult for people to distinguish, but I would say where we've been doubling down is really in terms of pushing our legacy, the fact that we've been around for 60 years, whatever that we do as an organization is focused on the long term. And therefore, in every part of our engagement, whether it is with distributors, whether it is customers, it's always to stress the longerity of the organization and the fact that the investors loan needs will evolve over 10, 20, 30 years, and this is an institution which has demonstrated its capable of managing the cycle, managing the challenges and delivering on what those investors expect over a long period of time. So you'll double down on that truck and comfort that people have with the brand. The second thing that we've articulated for a while now is the fact that whatever we do in terms of our products, in terms of our processes, or rather in terms of our investment management. At the core of it, there is always a very strong process because we think what these institutions longevity over long periods of time in terms of meeting investor requirements these processes. At the same time, you also need to make sure that your talent, the people within the organization are appropriately sort of skills, they are engaged, they are meeting with the market players, they are engaged with investors they are engaged in all sort of public medium because this is an environment in which people want to see what the fund managers are saying and doing. So we are conscious of that. We started a lot of our media conversations to make sure there is appropriate visibility for the fund managers, there is regular contact with our partners at every level. So I would say it's really the trust, it's the process and it's the engagement that we think will continue to define what UTI means to the customer and continue to stress the fact that these are very long-term journey. It's not a question of buying the fund which has the best performance in the last 1 year. It's a question of a fund, which has the right thought process in terms of processes, in terms of risk management to meet the needs of the investor over the medium to long term.