Why?
People believe that shares are available at low prices during IPO. After listing in the stock market, they can be sold at higher prices. This is the reason why people invest in IPOs.
This reason holds true for strong companies with high growth potential. But this reason may not always be true. This is especially true now when markets are highly volatile. The stock market is falling almost every other day.
The fall of 150-200 points on Nifty has now become routine.
At the same time, investors have also become cautious. Tech companies that came in at sky-high valuations with their IPOs last year have been taken to the cleaners.
zomato, paytmAnd like…
It is important to properly analyze the offering company along with the financial and other aspects of the offer.
In this article, we analyze the key points of Prudent Corporate Advisory Services IPO.
Here are 5 key points.
#1 IPO Details
Prudent Corporate Advisory is a leading company providing 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 the IPO:
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The offer is for 854,9,340 shares. 828,1,340 shares will be sold by Wagner Ltd. 268,000 shares will be sold by Shirish Patel. company will increase 53.9m (at the high end of the price band) through this issue.
Wagner Limited, an investment vehicle of TA Associates, a private equity firm that has invested in Prudent Corporate. At present, it holds around 39.9% stake. Shirish Patel is the CEO of Prudent Corporate. They hold around 3.2 per cent stake.
#2 About the company
Prudent Corporate was established in 2000 by Mr. Sanjay Shah. Today this Mutual Fund Distribution (MFD) company is in the list of top 10 MFDs in terms of assets under management and commission received.
Along with mutual fund services, it provides services related to insurance, equities, bonds, portfolio management, alternative investment funds, fixed income products, property and debt products.
One of the main 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. So in 2016 it came with Fundsbazaar. Through Fundsbazaar, an investor can transact in mutual funds without having a demat account.
Along with technology, many other factors such as a strong partner network, streamlined process and skilled workforce are responsible for the success of Prudent Corporate.
#3 Financial Snapshot
In the past two years, since the pandemic crash, the stock markets have seen a huge rally. New investors started making big investments.
This resulted in good business for all private wealth management services. Prudent Corporation was no exception to this.
2020-21 saw a massive growth of 22% in revenue as compared to a growth of 5.8% in 2019-20. A similar growth could be seen in Earnings Per Share (EPS).
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#4 Peer comparison
IIFL Wealth Management, ICICI Securities, CDSL, HDFC Asset Management, Nippon Life India and UTI are the listed competitors of the company.
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#5 GMP
The gray market premium (GMP) is the higher-than-normal price at which the shares offered in an IPO are traded.
Presently GMP of Prudent Corporate is running 30-35.
Things to keep in mind before applying
The company operates in a highly regulated environment. There is already an outstanding regulatory case against the company that investors should pay attention to.
The industry in which Prudent Corporate operates is not highly penetrative and has room to grow.
But isn’t this the same story that IPO companies always tell? Remember when Nippon India AMC and HDFC AMC came out with their IPOs a few years back?
They have been under tremendous pressure of late. They have failed to charge more from their customers. His returns are nothing to write home about since the listing. Both have marginal gains of 7-10% since listing.
Prudent Corporate’s growth graph looks pretty impressive, but we’ll have to wait and see if the IPO performs the same way.
with him market volatilityThe response to this IPO cannot be predicted.
As companies line up to raise funds from the market amid high valuations, investors need to consider several factors before investing their money in an IPO.
If you are investing in an IPO, take into account all the positive and negative factors affecting the company.
Take a closer look at the company’s financials and valuation. This will give you a clear picture of what is cooking.
Happy investment!
Disclaimer: This article is for informational purposes only. This is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com