Should You Subscribe To The IPO Of Prudent Corporate Advisory Services?

Prudent Corporate Advisory Services has recently announced an IPO which opens on May 10, 2022, and will be closed on May 12, 2022. Issue Size of the said IPO is (Upper Band) Rs. 5,386 million, while a total of 8.5 million shares will be on offer for sale. The Face Value of the IPO is Rs. 5, and the price band is Rs. 595 - Rs. 630. The minimum Lot size of the Prudent Corporate Advisory Services IPO is 23. The company 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.

Why Should You Subscribe To The Prudent Corporate Advisory Services IPO?

With a positive tone about the Prudent Corporate Advisory Services IPO, brokerage firm AnandRathi stated in a report, "The company has a scalable and asset-light model in a high growth underpenetrated Indian asset management industry with a diversified distribution network. However, the IPO is richly priced and the company will have to continue growing its business at a high growth rate, in order to justify the valuations - hence we give the IPO a 'Subscribe (Long Term)' rating."

At the upper end of the IPO price band, Prudent Corporate Advisory Services Ltd. is offered at P/E of 33.9x its FY22 annualized earnings, with a market capitalization of Rs. 26,086 Million. The company has reported RoNW of 28.73% in FY21.

Performance

According to the report, Prudent Corporate Advisory Services has developed faster among the 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. As on December 31, 2021, its assets under management from the mutual fund distribution business (AUM) stood at Rs. 484,114.74 million with 92.14% of its total AUM being equity-oriented. Its AUM has increased from Rs. 166,677.52 million as on March 31, 2018 to Rs. 484,114.74 million as on December 31, 2021, at a CAGR of 32.83% with its equity-oriented AUM increasing from Rs. 138,657.92 million to Rs. 446,059.12 million during the same period, at a CAGR of 36.49%. Considering these good performances, the brokerage firm has recommended investors to subscribe to the IPO.