Prudent Corporate shares list at premium to IPO price, stock begins trading 4% higher on debut

Prudent Corporate Advisory Services shares listed at a premium on Friday, Shares began trading at Rs 660 apiece, up 4 per cent from issue price of Rs 630. The IPO, which opened between May 10-12 with a price band of Rs 595-630 a share, received bids for 73.29 lakh equity shares against an offer size of 60.18 lakh equity shares.

prudent corporate advisory listing
Prudent Corporate Advisory Services shares listed at a premium on Friday, Shares began trading at Rs 660 apiece, up 4 per cent from issue price of Rs 630

Prudent Corporate Advisory Services shares listed at a premium on Friday, Shares began trading at Rs 660 apiece on BSE, up 4 per cent from issue price of Rs 630. The IPO, which opened between May 10-12 with a price band of Rs 595-630 a share, received bids for 73.29 lakh equity shares against an offer size of 60.18 lakh equity shares, subscribing 1.22 times on May 12, the final day of bidding. Retail investors have bought 1.29 times of the allotted quota and employees bid for shares 1.23 times the reserved portion. The part set aside for non-institutional investors has been booked 99 percent, while qualified institutional buyers (QIB) portion was booked 1.26 times.

The issue was entirely an offer for sale (OFS) by the existing shareholders of the company who will offload 85.49,340 shares with a face value of Rs 5 each. The company will not receive any proceeds from the issue. Most of the brokerages had suggested investors to exercise caution while subscribing to the issue. According to experts, higher valuations demanded by the company for the IPO was among the main reasons for the lacklustre response to the issue. Fair valuations might have shown a better response, they said.

“Prudent Corporate Ltd. has debuted at Rs. 650 i.e. 3.2% above its issue price on NSE. The company’s tepid listing can be attributed to the rich pricing of the issue and the competitive and regulated nature of the industry. The company operates in an underpenetrated Indian asset management industry and has a consistent track record of profitable growth due to a highly scalable, asset-light, and cash generative business model. We suggest long-term investors accumulate this stock gradually on dips. Those who applied for listing gains can maintain a stop loss of Rs. 600,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.

“Due to unstable market conditions, Prudent Corporate Advisory Services Limited received a drab response from investors. Company is operating in an underpenetrated Indian asset management industry with a CAGR of more than 20% and a pan-India diverse distribution network with the potential to expand into underserved B-30 markets. Due to a highly scalable, asset-light, and cash-generative business strategy, the company has demonstrated a consistent track record of profitable expansion. As a result, we recommend holding the stock for the long term,” said Mohit Nigam, Head – PMS, Hem Securities.

Prudent is one of the leading independent retail wealth management services groups (excluding banks) in India and among the top mutual fund distributors in terms of average assets under management and commissions received. The competitive intensity in financial product distribution industry has become more intense with entry of lot of fin-tech players. “The company might face challenges in maintaining its margins at 25 percent going forward,” a report from Choice Broking said.

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