UTI AMC Shares Fall 10%, the Biggest Drop Since Listing — Here’s Why?

Shares of UTI Asset Management Company (UTI AMC) tumbled nearly 10% on Monday, marking their steepest single-day fall since the company’s listing in 2020. The sharp decline came after the asset manager reported weak second-quarter (Q2 FY26) results, with earnings missing analyst expectations due to higher costs and weaker income growth.

Revenue and Income Decline

In its Q2 results, UTI AMC reported a 23% sequential decline in revenue, which was broadly in line with market expectations. The fall was largely driven by a massive 91% drop in other (market-to-market) income, reflecting volatility in non-core revenue streams.

At the same time, the company saw a 23% rise in employee costs, primarily due to one-off items, which exerted significant pressure on operating margins. As a result, the earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin fell sharply by 1,980 basis points from the previous quarter.

Also Read: Federal Bank Q2 FY26 Net Profit Declines Despite Record NII

Profit Misses Estimates

UTI AMC reported a profit after tax (PAT) of ₹132 crore, which missed estimates due to lower margins and weaker income. The company clarified that the PAT figure was adjusted for one-time costs related to its Voluntary Retirement Scheme (VRS) settlement under employee expenses.

Management Outlook for FY26

The management highlighted ongoing uncertainty regarding employee costs in the near term but expressed optimism about the second half of FY26, expecting improvement from new product launches and stronger market sentiment. The company also provided guidance for a 7–8% increase in other expenditure compared to the previous financial year, signaling cautious spending control going forward.

AUM Growth but Market Share Decline

UTI AMC’s quarterly average assets under management (AUM) rose 5% sequentially to ₹3.78 lakh crore. However, this growth did not translate into market share gains. The company’s average AUM market share slipped for the second consecutive quarter, falling from 3.1% in Q1 FY26 to 2.9% in Q2 FY26.
In contrast, peer HDFC AMC recorded a 10 basis point rise in market share to 12.9% during the same period, highlighting the competitive gap between the two players.

Equity AUM Still Low

A key concern remains UTI AMC’s low exposure to equity assets, which are typically more profitable for asset management companies. The firm’s equity AUM accounts for just 26% of its total AUM — far lower than HDFC AMC’s 65% and the industry average of 56%.
This lower equity mix limits UTI AMC’s ability to expand its margins, especially when compared to competitors with a stronger focus on equity-oriented funds.

Profitability and Yield Pressure

Another indicator of profitability, the adjusted PAT yield, dropped to 17 basis points in the September quarter from 26 basis points in the previous one — the lowest among industry peers. By comparison, HDFC AMC maintained a much higher PAT yield of 30 basis points.
The company also witnessed a rise in its Systematic Investment Plan (SIP) stoppage ratio, which increased from 74.51% in August to 76.27% in September, suggesting that more investors either paused or discontinued their SIP contributions.

Stock Market Reaction

Following the weak quarterly performance, UTI AMC shares fell 9.9% to an intraday low of ₹1,263.3, before recovering slightly to trade 5.9% lower at ₹1,318.5 around 12:15 pm. Despite this decline, the stock has still gained over 23% in the last six months, reflecting the sector’s broader recovery trend before the latest results.

Conclusion

UTI AMC’s latest quarterly performance highlights short-term pressure on profitability due to higher expenses and lower income. While the management expects improvement in the second half of FY26, investors remain cautious as the company continues to lag peers like HDFC AMC in equity AUM and market share.
The upcoming quarters will be crucial in determining whether UTI AMC can stabilize margins, regain investor confidence, and strengthen its position in India’s competitive asset management industry.

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