Prudent Corporate Advisory Services Limited IPO

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i. Prudent Corporate is an independent retail wealth management services group in India and is amongst the top mutual fund distributors in terms of average assets under management (“AAUM”) and commission received.  The company offers a technology-enabled, comprehensive investment and financial services platform with end-to-end solutions critical for financial products distribution and presence across both online and offline channels.

iii. Prudent Corporate Advisory Services Limited provides retail wealth management services. The company offers Mutual Fund products, Life and General Insurance solutions, Stock Broking services, SIP with Insurance, Gold Accumulation Plan, Asset Allocation, and Trading platforms.

iii. The company grew faster among national distributors (amongst the top 10 mutual fund distributors) in terms of commission and AAUM with a CAGR of 34.4% and 32.5% respectively for the five year period ending Fiscal 2021

iv. Incorporated in 2003, they provided wealth management services to 13,51,274 unique retail investors through 23,262 MFDs on its business-to-business-to-consumer (“B2B2C”) platform and are spread across branches in 110 locations in 20 states in India.

v. The Company is one of India’s leading independent and fastest-growing financial services groups. The company has built a nationwide network, servicing 16,356 PIN codes. Prudent Corporate Advisory Services has 1,067 employees strength, 35.05 lakhs live folios and 15.25 lakhs live SIPs as of December 31, 2021.

 

vi. Competitive Strengths:

  1. The company operate in an underpenetrated Indian asset management industry, that has grown at a CAGR of more than 20%.
  2. Growing independent financial products distribution platforms.
  3. The company have a granular retail AUM with a mix skewed towards high-yield equity AUM.
  4. The value proposition has led to increased participation and a long-standing relationship with MFDs.
  5. The company have a track record of innovation and use of technology to improve investor and partner experience.
  6. Pan-India diversified distribution network with the ability to expand into underpenetrated B-30 markets.

Objects of the Prudent Corporate Advisory Services Limited IPO:

The objects of the Offer are to (i) to carry out the Offer for Sale; and (ii) achieve the benefits of listing the Equity Shares on the Stock Exchanges
DRHP of Prudent Corporate Advisory Services Limited IPO
RHP of Prudent Corporate Advisory Services Limited IPO

Prudent Corporate Advisory Services Limited IPO Details:

Open Date: May 10 2022
Close Date: May 12 2022
Total Shares: 8,549,340
Face Value: ₹ 5 Per Equity Share
Issue Type: Book Built Issue
Issue Size: 538.61 Cr.
Lot Size: 23 Shares
Issue Price: ₹ 595-630 Per Equity Share
Listing At: NSE,BSE
Listing Date: May 23 2022

Promoters And Management:

Sanjay Shah is the Chairman and Managing Director of the Company. He holds a bachelor’s degree in business administration from Sardar Patel University and is a qualified chartered accountant. He has been admitted as a fellow member of the Institute of Chartered Accountants of India. He has been associated with the Company since its incorporation and has approximately two decades of experience in wealth management. Shirish Patel is a Whole-time Director and the Chief Executive Officer of the Company. He holds a bachelor’s degree and a master’s degree in business administration for finance, and a diploma in computer applications from the Gujarat University. He has been associated with the Company since December 1, 2005. Asthe Chief Executive Officer of the Company, he has been instrumental in its business expansion and has expanded the branch network from five to 105 branches as on date. Prior to joining the Company, he has worked with Leading Edge, ICICI Bank Limited, ICICI Capital Services Limited and Citibank, N.A., India and has approximately 22 years of experience in wealth management. Chirag Shah is a Whole-time Director of the Company. He holds a bachelor’s degree in economics from South Gujarat University and is a qualified chartered accountant. He has been admitted as a fellow member of the Institute of Chartered Accountants of India. He has been associated with the Prudent Group since 2004 and is currently serving on the board of Gennext, the Subsidiary, managing and developing the insurance business. Additionally, he is also responsible for the human resource, administrative and compliance functions of the Prudent Group. He has previously been associated with National Securities Depository Limited and has approximately 17 years of experience across the insurance and compliance sectors.

Financials of Prudent Corporate Advisory Services Limited IPO:

Particulars (in crores) December 21 March 21 March 20 March 19
Revenue from operations
Commission and Fees Income 314 277 229 215
Interest Income 3 3 5 6
Net gain on fair value changes 4 6 1 0
Total Revenue from operations 321 286 234 221
Expenses
Commission and Fees Expense 176 153 120 125
Employee benefits expense 48 55 48 43
Impairment on Financial Instruments 0 2 1 -0.9
Operating Profit 97 76 65 54
OPM% 29.90% 26.40% 27.30% 24.60%
Finance Cost 2 2 3 3
Depreciation 9 8 8 8
Other Income 7 8 1 3
Profit (Loss) before tax 77 60 37 28
Tax expenses 20 15 9 8
Profit (Loss) for the period 57 45 27 21
No.of shares 4 4 4 4
Earnings per share 14 11 7 5

Comparison With Peers:

Name of the Company Face Value EPS (in Rs) PE PAT (In Cr.) Mcap (in crores)
Prudent Corporate Advisory Services Limited 5 19 34 76 2520
Listed Peer
IIFL Wealth Management Ltd 2 65.13 26.6 578 15,560
ICICI Securities Ltd 5 42.85 12.3 1,383 16,948
Central Depository Services (India) Limited 10 29.78 42.8 311 13,292
Computer Age Management Services Limited 10 56.2 43.2 274 11,847
HDFC Asset Management Company Limited 5 65.32 30.8 1,393 42,892
Nippon Life India Asset Management Ltd 5 11.96 25.8 744 19,247
UTI Asset Management Company Ltd 10 42.09 18.6 534 9,940
 

Recommendation on Prudent Corporate Advisory Services Limited IPO:

Review and Recommendation of  Prudent IPO by InvestorZone is 3/10 1. Prudent has shown good growth in the last 3 years in Revenue and PAT both. 2. They are basically mutual fund and Insurance distributor. So, they get commission income from these instruments. And, major chunk of revenue comes from mutual fund regular plans. However, with the advent of players like Zerodha, Groww, Paytm Money etc. investors are now buying direct plans. So, going forward how business will sustain is a big question. 3. The comparison shown in the DRHP with players like HDFC AMC, UTI AMC , ICICI Securities, CAMS etc is incorrect as Prudent business model is quite different. 4. Asking P/E is 35 which looks high in comparison to Anand Rathi which is trading at P/E of 20x. Anand Rathi can be a nearest peer which company has not shown in the DRHP. Reason, we don't know. 5. With market condition turning red with hike in the interest rates, the short term market conditions are tough for IPO to list at premium.

Lead Manager of Prudent Corporate Advisory Services Limited IPO:

  1. Axis Capital Limited
  2. Equirus Capital Private Limited
  3. ICICI Securities Limited

Registrar of Prudent Corporate Advisory Services Limited IPO:

  1. Link Intime India Private Limited

Company Address:

Prudent Corporate Advisory Services Limited Prudent House, 3 Devang Park Society, Panjarapole Cross Road, Ambawadi, Ahmedabad-380 015 Phone: +91 79 4020 9600 Email: cs@prudentcorporate.com Website: https://www.prudentcorporate.com/

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