UTI AMC IPO: Anil Singhvi takes strong stand on issue, says do not enter - growth missing

UTI AMC IPO: One of the most anticipated Initial Public Offering (IPO) is of UTI AMC. It is opening on Tuesday. Zee Business Managing Editor Anil Singhvi has taken a strong stand on this issue takes and here is the strategy for investors that he has recommended. 

Giving a glimpse into the past, the Market Guru said that there was a time when Mutual Fund was known as UTI. This was around 1995-2000 and this MF has not changed with time.

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नहीं लेना है UTI AMC का IPO

अनिल सिंघवी- वैल्युएशंस मजबूत लेकिन ग्रोथ नहीं... UTI AMC में पैसा ना लगाएं#NewIPO #IPO #UTI #UTIAssetManagement @AnilSinghvi_ pic.twitter.com/HlYavPpqiH

— Zee Business (@ZeeBusiness) September 28, 2020

Times have changed now as the private sector has taken to this space gradually, he said.   

UTI AMC IPO, which opens tomorrow will close on 1 October. The price band of the equity shares is Rs 552-Rs 554. The lot size of this IPO will be 27 shares and it can be bid for a minimum amount of Rs 14958. The company is planning to raise Rs 2160 cr through the IPO. 

This is the biggest Asset Management Company (AMC) after SBI. UTI has been in the asset management business for over 55 years. He said that though the Assets Under Management (AUM) are quite substantial for this company, the balancesheet is getting weaker form many standpoints.  

He said that it does not mean that the situation is getting bad but the growth is missing, he added.  

Singhvi said that one thing which works for this IPO is the valuation it has kept for the shares, calling them reasonable. Whatever shares are coming for the issue are shares that are being sold by the existing investors. It is not the case that the money is going to the company. He said that through the IPO, company is planning to list itself and give the existing investors the option to exit. 

If one looks at the IPO in the context of ratios, profitability or market share, there is not much pull in it. The market values those products which have a good growth potential even if the size is small.

The US 64 scheme launched at that time was very popular, the Managing Editor said adding that there was a queue of investors that was several kilometress long - all of them wanted to buy this scheme. 

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What should investors do?

The Managing Editor said that investors can choose not to invest in the shares as he did not expect listing gains with this stock. He said that the listing gains should at least be 15-20 per cent.