Prudent Corporate Advisory Services Limited

Prudent Corporate Advisory Services reported a strong Q2 FY26. The daily average AUM for the first half of FY26 stood at INR 114,600 crores, with current AUM at INR 127,000 crores, an 11% increase. Quarterly average AUM for Q2 FY26 was INR 119,000 crores, growing 17% YoY and 8% QoQ. Operational profit grew 7.3% sequentially, though overall profit growth was impacted by lower treasury income and an additional trail commission provision totaling INR 4.3 crores.

Equity AUM grew by 13.2% YoY to INR 117,650 crores in September 2025, an increase of INR 13,700 crores. This growth was primarily driven by strong net sales of INR 3,600 crores and the addition of INR 2,050 crores from Indus AUM. The monthly SIP book reached INR 1,085 crores as of September 2025, adding INR 210 crores over the last 12 months, demonstrating robust SIP franchise growth. The company aims to achieve INR 1,200 crores in monthly SIP flow by March 2026.

The insurance segment saw revenue growth of 11.5% sequentially, driven by strong traction in fresh premiums. Retail health fresh premium grew 33% YoY, with the book now at INR 162.5 crores. However, the business is navigating the impact of GST changes. In life insurance, approximately 30% of the business experienced an 18% revenue cut due to GST, while in health insurance, about 70% of the business was impacted. The final revenue impact and arrangements are expected to be clear after the December quarter.

SEBI's draft consultation paper on mutual fund Total Expense Ratio (TER) proposes significant changes. While the revised expense ratio will be exclusive of statutory levies like GST, creating a level playing field, the removal of a 5 basis point exit load and proposed brokerage cost reductions (2 bps for cash, 1 bps for derivatives) could lead to an overall industry impact^🌐 of 6 to 7 basis points reduction on the TER side. Management believes this impact will likely be shared across the value chain, including distributors, and is awaiting final feedback by November 17.

Prudent successfully completed the merger of Indus, a highly cash-accretive acquisition. This addition is expected to deliver annualized mutual fund commission of INR 22-23 crores and a cash profit before tax of approximately INR 15 crores. The acquisition added about INR 2,050 crores in AUM. The company's treasury corpus stands at INR 480 crores, providing capital for pursuing further strategic inorganic opportunities.

Despite increased competition in the distributor acquisition landscape, Prudent continues to attract new ARN holders, recruiting close to 3,100 year-to-date. Management noted that attrition is minimal, especially among their top 10-20% partners. The company's weighted average commission sharing in the indirect channel is in the range of 67-68%. The number of insurance POSPs has stagnated around 13,000, primarily due to the migration of business from Gennext to Prudent, which temporarily shifted focus from new POSP recruitment.

The company granted 130,945 options to 388 employees, with an option value of approximately INR 542 per share. This will result in a P&L hit of about INR 7.10 crores, which will be amortized over the next 12 months, impacting quarterly employee benefit expenses by approximately INR 1.775 crores.