Neutral Prudent Corporate Advisory; target of Rs 2,300: Motilal Oswal

Motilal Oswal research report on Prudent Corporate Advisory

Prudent Corporate Advisory (Prudent) posted an op. revenue of INR 2.8b, +18% YoY (in line) in 4QFY25. Revenue growth was fueled by an 18% YoY jump in commission & fees income to INR 2.8b. For FY25, operating revenue grew 37% YoY to INR 11b. EBITDA grew 13% YoY to INR 686m (15% beat), reflecting an EBITDA margin of 24.3% (vs. 25.4% in 4QFY24 and our est. of 21.7%). Operating expenses rose 20% YoY to INR 2.1b (in line), with fees & commission expenses/employee expenses growing 29%/5% YoY, while other expenses dipped 9% YoY.

Outlook

We cut our earnings estimates by 8% each for FY26/27 due to a decline in blended yields and higher commission payouts. However, we expect Prudent to deliver a revenue/EBITDA/PAT CAGR of 19%/17%/21% over FY25-27, fueled by growing MF AUM and a focus on increasing the share of non-MF business in the overall mix. The company is expected to maintain an RoE of >28% for FY26/FY27. We reiterate our Neutral rating with a TP of INR 2,300 (based on 33x EPS FY27E).