The Crow Verdict: As a wealth management company and mutual fund distributor, profit margins are primarily dependent on commissions. Other revenue sources are its tech products such as debentures, Digital Wealth, and financial advisor platform, both of which are burgeoning. At a time when investors are going DIY and opting for Direct mutual funds, you might think this company has no relevance. But the thing is HNIs and UHNIs don''t care about the expense ratio of mutual funds. They just consider it as a fee for their wealth management. And India is only seeing a rise in its list of rich people. Revenue from such commissions stood at 34% of total in ''21. In that case, the business seems okay and the company seems strong. Despite the few "usual" criminal proceedings and litigations against it.
However, this IPO is pure OFS, which means not a single paisa will go to the company. That requires us to be more critical of the company. Valuation is pretty strict and not much has been left on the table. With a steep PE of 50.7 (against peer IIFL''s 28.4) when it faced a poor show this year, I feel this won''t give any listing pop. Plus, the 35% retail quota will further dampen things as on listing retail investors will be left holding the bag.
Like Star Health, this has a good management. Like ABSLAMC, this has a fair business with low profit margins. But like CarTrade and Paytm, this is asking for huge valuations. Odds of discount listing are high, especially in this volatile market. Risk-takers who don''t mind converting to positional traders may enter via retail applications by looking at the subscription numbers after 3 PM.
Red flags: 8 out of 13 parameters. I will apply with my only 2 retail accounts via UPI at 4 PM and then accept the mandate after 5 PM.
Always in restraint of Mrs. Crow.
Zerodha (Trading Account)
RHP
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