IPO Note - Prudent Corporate Advisory Services Ltd By Choice Broking
Salient features of the FPO: •
PRUDENT CORPORATE ADVISORY SERVICES LIMITED (PCAS) is amongst the top mutual fund distributors in terms of average assets under management (“AAUM”) and commission received.
• As on Dec 31, 2021, mutual fund distribution business (AUM) stood at Rs48,411 cr with 92% of their total AUM being equity oriented.
• Total issue is purely OFS of 0.85 cr shares. At the higher price band of Rs630, issue size comes at Rs539 cr.
• During 9MFY22, PCAS reported operating revenue of Rs321 cr and PAT of Rs58 cr.
Key competitive strengths:
• Operating in an underpenetrated Indian asset management industry that has grown at a CAGR of more than 20%.
• Growing independent financial products distribution platforms. • Granular retail AUM with a mix skewed towards high-yield equity AUM
• Pan-India diversified distribution network with ability to expand into underpenetrated B-30 markets
• Track record of innovation and use of technology to improve investor and partner experience
Valuation:
At the higher price band of Rs630, the issue is valued at P/E of 33.9x on FY22E annualized EPS and at P/S of 6.1x on annualized FY22E. The demanding valuation at Rs2,608 cr seems expensive leaving no margin of safety for investors in highly competitive financial products distribution industry.
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