Prudent Information About the Prudent Corporate Advisory Services IPO

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  • May 10, 2022 - Prudent Information About the Prudent Corporate Advisory Services IPO

Prudent Information About the Prudent Corporate Advisory Services IPO

May 10, 2022

Prudent Information About the Prudent Corporate Advisory Services IPO

IPOs have always been attractive to investors.

Why?

People believe that shares are available at lower prices during an IPO. These can be sold at higher prices once they get listed on the bourses. This is one of the reasons why people invest in an IPO.

This reason holds true for strong companies with high growth potential. But this reason may not always be correct. This is especially true now when the markets are highly volatile. Almost every other day, the share markets are falling.

A fall of 150-200 points on the Nifty has become routine now.

Also, investors have become more cautious. Tech companies that came out with their IPOs last year, at sky high valuations, have been taken to the cleaners.

Zomato, Paytm, and the likes...

It's important to properly analyse the financials and other aspects of the offer as well as the company making the offer.

In this article, we analyse the key points of the IPO of Prudent Corporate Advisory Services.

Here are 5 key points.

#1 Details of the IPO

Prudent Corporate Advisory is a leading company that offers financial services.

The issue of Prudent Corporate opens on 10 May 2022 and will close on 12 May 2022.

The book running lead managers for this IPO are ICICI Securities, Axis Capital, and Equirus Capital.

Following are the important details of IPO:

Prudent Corporate Advisory IPO Details

Issue Type Book Built Issue IPO
Face Value Rs 5 per share
IPO Price Rs 595 to 630 per equity share
Market Lot 1 lot - 23 shares and in the multiples thereof
Issue Size Rs 53.8 m
Basis of Allotment Date 18-May-22
IPO Listing Date 23-May-22
Data Source: Company's Red Herring Prospectus (RHP)

The offer is of 854,9,340 shares. 828,1,340 shares will be sold by Wagner Ltd. 268,000 shares will be sold by Shirish Patel. The company will raise Rs 53.9 m through this issue (at the higher end of the price band).

Wagner Ltd, an investment vehicle of TA Associates, is a private equity firm that has invested in Prudent Corporate. At present, it holds around 39.9% of the stake. Shirish Patel is the CEO of Prudent Corporate. He has a stake of around 3.2%.

#2 About the company

Prudent Corporate was founded by Mr Sanjay Shah in 2000. Today this Mutual Fund Distribution (MFD) company is on the list of top 10 MFDs in terms of assets under management and commission received.

Along with mutual funds services, it provides services related to Insurance, Equities, Bonds, Portfolio Management, Alternative Investment Fund, Fixed Income Products, Properties, and Loan Products.

One of the chief reasons for the success of Prudent Corporate is its early investment in technology. The company started investing in technology in the year 2004 itself.

It did not have its own mutual fund transaction platform till 2015. Hence in 2016, it came up with Fundsbazaar. Through Fundsbazaar, an investor can transact in a mutual fund without a Demat account.

Along with technology, various other factors like a strong partner network, streamlined process, and skilled employees are responsible for the success of Prudent Corporate.

#3 Financial Snapshot

In the last two years, ever since the pandemic crash, share markets have seen a massive rally. New investors started investing big time.

This resulted in good business for all private wealth management services. Prudent Corporation was no exception to this.

A whopping growth of 22% in revenue was seen in 2020-21 compared to a 5.8% growth in 2019-20. A corresponding increase can also be seen in earnings per share (EPS).

Prudent Corporate - Financial Snapshot

Particulars (Rs m) 31-Mar-21 31-Mar-20 31-Mar-19
Revenues 2,865.10 2,348.30 2,219.90
Revenue Growth (%) 22% 5.80%  
       
Expenditure Before Tax 2,343.70 1,987.90 1,944.90
% of Total Income 79.50% 84.20% 86.40%
       
Net Profit 453 278.5 210.2
Net Profit Margin (%) 21.10% 15.90% 13.80%
       
Net Worth 1,576.50 1,125.20 831
Return on Net Worth (%) 23.70% 24.80% 25.30%
       
Basic Earnings per share (EPS) 10.96 6.74 5.08
Data Source: Company's Red Herring Prospectus (RHP)

#4 Peer Comparison

IIFL Wealth Management, ICICI Securities, CDSL, HDFC Asset Management, Nippon Life India, and UTI are the listed competitors of the company

Comparative Analysis

Company Total Income (2021) (Rs m) EPS (Basic) (Rs) Return on Net Worth (%) NAV per equity share (Rs)
Prudent Corporate Advisory Services 2,949 11 28.7 38.1
IIFL Wealth Management 16,590.20 42.2 13.1 321.7
ICICI Securities 25,861.70 33.1 5.9 56.6
Central Depository Services (India) 4,006.30 19.2 21.9 88
Computer Age Management Services 7,352.60 42.1 39.8 105.7
HDFC Asset Management Company 22,017.40 62.3 27.8 224.3
Nippon Life India Asset Management 14,193.40 11.04 21.9 50.3
UTI Asset Management Company 11,986.30 39 15.3 255.3
Data Source: Company's Red Herring Prospectus (RHP)

#5 GMP

Grey Market Premium (GMP) is the price over and above the normal price at which the shares offered in IPO are traded.

At present, the GMP of Prudent Corporate is running around Rs 30-35.

Points to keep in mind before applying

The company operates in a highly regulated environment. There's already an outstanding regulatory matter against the company which investors should take note of.

The industry in which Prudent Corporate operates is not highly penetrated and there's scope to grow.

But isn't this the same story which IPO companies always tell? Remember when Nippon India AMC and HDFC AMC came out with their IPOs a couple of years back?

They are under immense pressure of late. They have failed to charge higher fees from their clients. Their returns since listing are not something to write home about. Both are up a meagre 7-10% since listing.

Prudent Corporate's growth graph looks very impressive, but we'll have to wait and see if the IPO performs the same way.

With the markets being volatile, the response to this IPO cannot be predicted.

As companies line up to raise funds from the market amid high valuations, investors need to consider many factors before investing their money in an IPO.

If you are investing in an IPO, weigh in all the positive and negative factors affecting the company.

Take a close look at the company's financials and valuations. It would give you a clearer picture of what's brewing.

Happy Investing!

Since you're interested in IPOs, check out the current IPOs and upcoming IPOs on our website.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

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