Prudent Corporate Advisory Services’ three-day initial public offering (IPO) opens Tuesday (May 10) and closes Thursday (May 12). The company has set a price range of Rs 595-630 per share for the Rs 538.6 crore IPO. The retail wealth management firm raised just over Rs 159 crore from anchor investors ahead of the initial share sale. The issue is entirely an offer for sale (OFS) by existing investors in the company. Prudent Corporate offers mutual fund products, insurance products, stock brokerage services, fixed income products, gold accumulation plan, and more.
Prudent Corporate Advisory Services IPO Details
Price range – Rs 595-630
IPO opening date – May 10
IPO closing date – May 12
Date of grant – May 18
IPO date – May 23
Number of shares before issue – 41,406,680 equity shares
Offer to sell (OFS) – 8,549,340 capital shares
Lot size – 23 stocks
Employee discount – Rs 59 per share
QIB part (including anchor) – 50% of the offer
Non-institutional portion– 15% of the offer
Retail – 35% of the offer
Gray Market Premium Prudent Corporate IPO (GMP)
Shares of Prudent Corporate have commanded a gray market premium (GMP) of Rs 30, according to IPO Watch. The IPO shares are trading at Rs 660 each on the gray market.
Should I subscribe to Prudent Corporate IPO?
Hem Securities: subscribe for the long term
“The company brings the issue to a price range of Rs 595-630 per share at a p/e multiple of 45x on a 9 month FY22 eps basis. The company operating in India’s underpenetrated asset management industry, which has grown at a CAGR of over 20%, has a diverse pan-India distribution network with the ability to span under-penetrated B-30 markets. The company has demonstrated a consistent track record of profitable growth through a highly scalable, asset-light and cash-generating business model. Therefore, we recommend that you “Subscribe” on the long-term issue. »
Marwadi Financial Services: Avoid
Prudent Corporate Advisory Services provides wealth management services to 13,51,274 unique retail investors through 23,262 MFD on a business-to-business-to-consumer (B2B2C) platform and is spread across branches in 110 locations in 20 states of India, as of Dec 31, 2021. “Given FY21/FY22 (annualised) EPS of Rs.10.94/Rs.18.56 on a post issuance basis, the company will enroll in a P/E of 57.59x/33.95x with a market cap of Rs 26,086 million while its peers, namely IIFL Wealth Management and ICICI Securities, trade at a PE of 27.3x and 12.6x. the “Avoid” rating to this IPO because the company is available at an expensive valuation relative to its peers. We believe the valuations are not in favor of investors.
Angel One: Neutral
Prudent Advisory grew its AUM at a CAGR of 32.8% between March 2018 and December 2021. Additionally, the company grew its revenue and profit at a CAGR of 13.6% and 46.8% between FY19 and FY21 despite the negative impact of Covid-19. For 9MFY22, Prudent reported revenue of Rs 321.2 crore while net profit at Rs 57.6 crore has already surpassed FY21PAT by Rs 45.3 crore.
“At the upper end of the price range, Prudent will trade at a P/E multiple of 34.0x its annualized EPS for 9MFY2022 versus Anand Rathi which is trading at 20.5xFY2022. We believe Prudent has a very strong retail-focused business model that gives it a distinct competitive advantage that will be difficult to replicate. However, valuations are higher than peers which will limit short-term gains and so we have a NEUTRAL recommendation on the IPO.
Jainam Broking: Register
Prudent Corporate Advisory Services is one of the leading independent wealth management services groups (non-banks) in India and is among the leading mutual fund (MF) distributors in terms of average assets under management and commissions earned . As of December 31, 2021, the company’s assets under management from the mutual fund distribution business stood at Rs 48,411.5 crore, with 92% of their total assets under management focused on equities. “We recommend subscribing on the following metrics that financial penetration is expected to increase with increasing financial literacy and is expected to continue to grow at a healthy rate due to strong demand and supply. Given that the company enters with a higher valuation, it could be subject to corrections in the near future.
Choice Broking: subscribe with caution
According to Choice Broking, given that 85% of the business comes from MF distribution, “the business is very cyclical depending on the behavior of the stock market.” The competitive intensity in the distribution of financial products has intensified with the entry of fintech players. “The company may struggle to maintain margins at around 25% in the future. The demanding valuation at Rs 2,608 crore is expensive, leaving no margin of safety for investors,” he said. given these parameters, it assigned an “underwrite with caution” rating to the issue.
Note that upon successful listing, Prudent Corporate Advisory will join its listed counterparts such as IIFL Wealth Management, ICICI Securities, CDSL, Computer Age Management Services, HDFC AMC, Nippon Life Indian Asset Management and UTI Asset Management. ICICI Securities, Axis Capital and Equirius Capital are the lead managers of the issue.
(Recommendations in this article are from respective research analysts and brokerage firms. Financial Express Online assumes no responsibility for their investment advice. Investments in capital markets are subject to rules and regulations. Please see your investment adviser before investing.)