PL Capital initiated coverage on the shares of Canara Robeco Asset Management Company with a 'Buy' rating. This comes a day before the shares made their debut on stock markets on October 16.
The domestic brokerage kept a target price of Rs 320 per share for the stock, implying an upside potential of more than 20 percent from the IPO price of Rs 266 apiece.
What PL Capital said:
PL Capital said that it is initiating coverage on the stock with a 'Buy' rating as it is optimistic about its business prospects, given its better equity performance, higher equity share of 90 percent which could lead to higher core earnings, and telescopic pricing which would have a limited impact on equity yields.
"We see healthy core earnings CAGR of 17% over FY25-28E, better than listed peers. Upper band of Rs 266 suggests a value of 19.6x on Sep'27 core EPS (UTIAM: 16.7x, ABSLAMC: 22.7x), indicating 42.5% discount to NAM. We assign 24x multiple to arrive at TP of Rs 320; CRAMC is attractive in the small-cap space. Initiate with 'BUY'," it said.
The domestic brokerage also noted that being a subsidiary of Canara Bank, the about-to-be-listed AMC firm benefits from the bank’s widespread branch network and retail customer base, facilitating distribution of MF products across the country.
Canara Robeco AMC IPO GMP:
Ahead of listing, the unlisted shares of the company were trading with around 6 percent grey market premium (GMP) over the IPO price, according to data on Investorgain. This is higher than the 4 percent GMP quoted by the site earlier yesterday, but lower than the 13 percent quoted before the IPO opened for public bidding.
According to IPO Watch, the unlisted shares of the company were trading with nearly 4 percent GMP.
Key details about Canara Robeco AMC IPO:
The initial public offering of Canara Robeco saw strong investor interest during its three days of public bidding, being subscribed nearly 10 times (974 percent) between October 9 and October 13 at a price band of Rs 253-266 apiece.
The Rs 1,326-crore IPO entirely comprised an offer for sale (OFS) of nearly 5 crore shares, with no fresh issue component. This means that none of the IPO proceeds will go to the company as they will be received by the selling promoters. Currently, Canara Bank owns 51 percent stake in Canara Robeco while Orix Corporation holding has the remaining stake in the AMC.
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