Company Update : Prudent Corporate Advisory Ltd By Motilal Oswal Financial Services Ltd
Reports 8% miss on PAT due to slight miss on revenue and costs
* Prudent reported an operating revenue of INR2.9b, +36% YoY (in line) in 3QFY25, driven by 36% YoY growth in commission and fees income to INR2.8b. For 9MFY25, operating revenue rose 45% YoY to INR8.2b.
* Commission and fees income for the quarter rose 36% YoY to INR2.8b, of which INR2.4b and INR286m were contributed by the distribution of MF products and insurance products, respectively.
* The QQAUM stood at INR1.1t, up 47% YoY. The monthly SIP flow grew to INR9.35b from INR6.5b in 3QFY25 and INR8.74b in 2QFY25.
* The total premium for the quarter came in at INR1.5b, of which the life insurance premium stood at INR1.2b and the general insurance premium stood at INR372m.
* Other income for 3QFY25/9MFY25 rose 46%/60% YoY to INR66m (6% miss)/INR214m.
* Operating expenses mounted 37% YoY to INR2.2b (in line), led by 49% YoY growth in commission & fees expenses and 25% YoY growth in employee expenses. However, other expenses dipped 8% YoY to INR207m.
* EBITDA grew 32% YoY to INR659m (6% miss), reflecting an EBITDA margin of 23.1% (vs. 23.8% in 3QFY24 and 24.0% in 2QFY25).
* PAT rose 35% YoY to INR482m in 3QFY25 (8% miss). For 9MFY25, PAT increased 53% YoY to INR1.4b.
Valuation and view
* We expect the revenue growth momentum to sustain in the medium to long term, primarily because of the following reasons: 1) increasing MF AUM mainly driven by improving SIP participation, and 2) Prudent’s focus on a one-stop-shop solution, which is poised to result in an increase in distribution revenue from higher-margin products such as insurance.
* We expect the company to deliver a revenue/EBITDA/PAT CAGR of 31%/35%/38% over FY24-27, fueled by growing MF AUM and increasing share of insurance in the overall mix. The company is expected to maintain an RoE of 30%+ for FY25/FY26/ FY27. We reiterate our Neutral rating on the stock with a TP of INR3,200 (based on 42x EPS Sep’26E).
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