Prudent Corporate IPO subscription status: Prudent Corporate IPO subscribed 21% in first hour of bidding process

New Delhi: The Rs 538.61 crore initial public offering (IPO) of Prudent Corporate Advisory Services was subscribed 21 per cent within the first hour of the bidding process on Tuesday.

The issue, which kicked off for subscription earlier today, can be subscribed till Thursday, May 12. The company is selling its shares in the range of Rs 595-630 apiece.

According to the data from BSE, investors made bids for 60,18,689 equity shares or 21 per cent by 11.05 am as against 12,81,514 equity shares on offer.

The bidding was majorly driven by retail bidders, whose portion was subscribed 42 per cent, whereas employee quota was subscribed only 3 per cent. HNI and institutional bidders kept off the bidding process, thus far.

The issue is 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.

The company has allocated shares aggregating to Rs 6.5 crore for its eligible employees, who will get a discount of Rs 59 per equity shares during the bidding process.

The company has reserved 50 per cent of the net offer for qualified institutional buyers (QIBs), whereas non institutional buyers (NIIs) will get 15 per cent allocation. Remaining 35 per cent shares will be given to retail bidders.

At the upper range of the price band, the retail wealth management services player is valued at a P/E of 33.9x based on FY22 annualized earnings. Investors can bid for a minimum of 23 shares and in multiples thereafter.

The issue has received mixed recommendations from brokerages, who are citing rich valuations, competitive industry and market volatility as key concerns while they like the company’s sound performance, solid balance sheet, wide experience and pan India network.

“Based on our quick forecast, EPS is expected to increase to Rs 21.6 per share FY24E and thereby demanding valuation comes at P/E at 29x FY24E which seems stretched,” said Choice Broking in its IPO report.

The brokerage has given a ‘subscribe with caution rating’ on the issue as it believes the demanding valuation at Rs 2,608 crore is expensive leaving no margin of safety for investors in the highly financial products distribution industry.

Ahead of its IPO, Prudent Corporate Advisory Services raised Rs 159.43 crore from 24 anchor investors by allocating a total of 25,30,651 equity shares at Rs 630 apiece, as per the circular uploaded on BSE.

ICICI Securities,

and Equirus Capital are the book running lead managers to the issue, whereas Link Intime has been appointed as the registrar to the issue.