Prudent Corporate Advisory Services Limited Q3 FY26 Earnings Call Summary

Summary

Prudent Corporate Advisory Services Limited - Q3 FY 2026 Earnings Call Summary Wednesday, January 28, 2026, 4:00 PM IST

Event Participants

Executives 5 Chirag Kothari (CFO), Chirag Shah (Non-Executive Director), Parth Parekh (Head of IR), Sanjay Shah (CMD), Shirish Patel (CEO)

Analysts 5 Ansuman (ICICI Securities), Dipanjan Ghosh (Citi Group), Lalit Mohan Deo (Equirus Securities), Niranjan Kumar (Avendus Spark), Prayesh Jain (Motilal Oswal), Sanketh Godha (Avendus Spark)

Financials & KPIs

Geographic & Segment Commentary

• Mutual Funds: Quarterly average AUM grew 7.2% sequentially with stable yields (excluding a ₹1.4 crore one-off from KYC-related brokerage release). Management noted that while the broader market corrected 5% in January, the current AUM remains resilient at ₹1,26,000 crores.
• Insurance: Premium grew 13% QoQ led by Life Insurance (LI), but revenue grew only 3.6% due to GST rationalization in health insurance where rates were reduced by 18% following the shift to nil GST. LI yields have shifted slightly due to a product mix favoring TULIPs and ULIPs over traditional plans.
• Non-MF/Non-Insurance Products: Revenue run rate is steady at ₹8-9 crores per quarter. Growth is driven by PMS, Fixed Deposits, and Loan Against Mutual Funds (currently ₹300 crore book), offsetting the loss of revenue from the discontinued P2P segment.

Company-Specific & Strategic Commentary

• Indus Acquisition Integration: The integration is complete with 15 relationship managers retained; the deal is highly cash-accretive and improved the direct-to-B2B2C AUM ratio by 1%, resulting in a ~70-80 bps improvement in the payout ratio.
• TER Regulatory Changes: New SEBI structure makes TER exclusive of GST, creates a level playing field between GST-registered and unregistered distributors. This strategically benefits Prudent by making it more attractive to smaller unregistered MFDs.
• Operating Efficiency: Revised the useful life of Karvy acquired assets from 10 to 15 years based on operating experience, reducing quarterly depreciation by ₹1.7 crores.
• Digital/Platform Strength: January witnessed “highest ever” registrations in SIPs and health insurance, suggesting that the platform’s competitive position is strengthening despite new B2B2C entrants.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

TER & Commission Impact

• Question: Has any AMC initiated negotiations on yield cuts following the removal of the 5 bps benefit? (Niranjan Kumar)
• Answer: No formal negotiations yet, but discussions will start in mid-February; management expects AMCs to pass the 5 bps cut to distributors by April 2026 (Shirish Patel).

Market Share & Attrition

• Question: Is MFD market share declining due to internal challenges or aggressive competition? (Niranjan Kumar)
• Answer: No, the perceived dip in indirect share is due to the Indus acquisition being categorized as B2C. Net addition of MFDs remains steady at ~4,800 annually (Shirish Patel).

GST Benefit for Prudent

• Question: How does the new “exclusive of GST” commission structure help Prudent? (Lalit Mohan Deo)
• Answer: Previously, non-GST distributors received a rate “inclusive” of tax they didn’t pay. Now, everyone gets a net rate; this improves Prudent’s competitiveness or margin on the 50% of AUM contributed by non-GST partners (Shirish Patel).

Asset Amortization

• Question: What is the impact of changing the asset life of Karvy and Indus? (Sanketh Godha)
• Answer: Karvy WDV is ~₹90 crores and Indus is ~₹107 crores. Combined annual amortization will be ~₹18 crores. Additionally, a ₹92.3 lakh finance cost for Indus deferred payment will recur for 11-12 quarters (Sanjay Shah).

Key Takeaway

Prudent Corporate Advisory Services delivered a steady Q3 FY26 with a 19.6% YoY growth in PAT to ₹57.6 crores, underpinned by a 21% growth in average AUM. The integration of Indus Capital has been successful, contributing to improved direct-business ratios and payout efficiencies. Despite a 5% market correction in January, the company reported “highest ever” monthly registrations for SIPs and net sales, targeting a ₹1,200 crore monthly SIP flow by March 2026. Management remains confident in neutralizing the upcoming TER regulatory headwinds (removal of 5 bps benefit) by leveraging the new GST-exclusive commission structure, which favors large platforms over smaller unregistered players. Moving forward, the company remains focused on inorganic growth via its ₹537 crore treasury book while maintaining stable net margins through proactive commission management.