Hold Prudent Corporate Advisory Services: target of Rs 2535: ICICI Securities

Hold

ICICI Securities's research report on Prudent Corporate Advisory Services

Prudent Corporate Advisory Services (Prudent) has progressed well in terms of AUM growth aided by MTM, traction in SIP and growth in MFDs. AUM/gross SIP flows/MFD count clocked CAGR of 40%/20%/19% between FY20–25 and grew 13.9% QoQ / 27.7% YoY /12.8% YoY in Q1FY26, respectively. Its superior execution in insurance segment (insurance premium / revenue grew 11%/22% YoY in Q1) is notable. Upside risks may emanate from continued traction in SIP (38% of client base is yet to have any SIP scheme) and spike in insurance cross-sales. Higher mix of equity within AUM (96.7%) lends higher growth potential for Prudent vs. AMCs. Any MTM fall in AUM, rise in direct mix (AUM mix under direct plans has increased to 47.3% in Jun’25 vs 45% in Jun’24) and cut in commissions (both AMC and insurance) are additional risks. There is an increasing trend of commission rationalisation by AMCs. While Prudent can pass on the same to distributors, it is a risk considering the reduction in overall payout to distributors. Maintain HOLD.

Outlook

Our target price remains unchanged at INR 2,535, basis 35x (unchanged) FY27E EPS of INR 72. The multiple is basis tailwinds of strong SIP/MTM growth and strong revenue growth prospects in insurance business. Key downside risk involves lower net yields driven by commission cuts by AMCs

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