Canara Robeco AMC IPO Opens Amid Grey Market Spike; Brokerage Flags Risks Due To Reliance On Equity-Oriented Schemes

Canara Robeco Asset Management Company (CRAMC) has launched its initial public offering (IPO), which will remain open for bidding until October 13.

According to BSE data, investor response on day one has been moderate, with the public issue subscribed 0.22 times, the retail portion 0.35 times, and the non-institutional investor segment 0.21 times as of 04:30 p.m. IST. 

Meanwhile, the IPO’s Grey Market Premium (GMP) surged to ₹35 on Thursday from ₹20 yesterday.

The IPO, entirely an offer for sale (OFS), is priced in the band of ₹253 - ₹266 per equity share, with the company aiming to raise ₹1,326.13 crore. The shares are proposed for listing on both the BSE and NSE. A lot comprises 56 shares, and allotment is expected on October 14, with listing likely on October 16.

SBI Capital Markets, Axis Capital, and JM Financial are the book-running lead managers, while MUFG Intime India serves as the registrar.

Canara Bank’s shares closed 0.16% higher at ₹126.2.

Brokerage View

CRAMC is a mid-sized fund house with a strong focus on equities, catering primarily to retail investors.

According to Antique Stock Broking, the firm’s mutual fund quarterly average AUM (QAAUM) expanded from ₹624.9 billion in FY23 to ₹1,033.4 billion in FY25, registering a 28.6% CAGR, in line with the industry’s 29%. Equity-oriented AUM constitutes 91.7% of total QAAUM, significantly higher than the industry average of 62%.

Key flagship schemes include large & mid-cap, large-cap, flexi-cap, small-cap, and equity hybrid funds, with AUMs ranging from ₹108 billion to ₹261 billion.

While CRAMC has achieved strong growth, it faces risks due to its heavy reliance on equity-oriented schemes. Three-year equity fund performance lags most peers, and monthly SIP inflows have shown a declining trend, contrasting with industry growth. Retail participation is high, with B-30 AUM comprising 24% of total assets.

Financially, CRAMC posted revenue growth from ₹1.90 billion in FY23 to ₹3.64 billion in FY25, with profit rising from ₹0.79 billion to ₹1.91 billion.

At the upper price band of ₹266, CRAMC is valued at 27.8x FY25 P/E, lower than peers like HDFC AMC and NAM.

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