Strong SIP book gives Prudent Corporate confidence on 20% growth

Sanjay Shah, Chairman and Managing Director of Prudent Corporate Advisory, an Indian retail wealth management firm offering mutual funds, insurance, stocks, and other investment products, is projecting growth of around 18-20%.

Shah said the growth will be driven by two main factors. Firstly, the company's strong systematic investment plan (SIP) book, which stands at ₹1,060 crore against a total asset under management (AUM) of ₹1,17,000 crore, provides a steady inflow, translating to an annual collection of 10-12% of its AUM.

Secondly, by factoring in an assumed market appreciation, or 'mark-to-market', of around 10%, the company can anticipate a combined growth of over 18-20% in both its AUM and revenue, independent of significant market volatility.



Addressing the market dynamic between direct and advisor-led investing, Shah expressed his belief that both segments are poised for significant expansion.

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He clarified that Prudent's focus remains on capturing market share in the 'regular plan' segment. He also pointed out that 'direct' investing does not always equate to 'do-it-yourself', as many such investments are supported by advisory services, which have an inbuilt cost.

Shah further highlighted the vast potential for growth in the Indian market, observing that the current investor base of 5.5 crore could easily double. He contrasted the relatively low number of mutual fund advisors, at around 175,000, with the significantly larger force in the insurance sector, suggesting a substantial runway for expansion in financial advisory services.

Prudent Corporate Advisory has announced the acquisition of Indus Capital's mutual fund distribution business. Shah said that the move is part of the company's inorganic growth strategy, leveraging its significant cash reserves.

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Shah explained that the company is currently sitting on ₹600 crore in cash, and the acquisition will be an all-cash deal. The payment structure involves an initial tranche of ₹85 crore, with the remaining amount to be paid over the next three years. He confirmed that no debt will be taken on to fund the acquisition.

The company, which has a current market capitalisation of ₹11,718.09 crore, has seen its shares gain more than 20% over the last year.

For the full interview, watch the accompanying video

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