DAM Capital Advisors IPO - Issue Details, Financials, Strengths, Risks, Peer Comparison And More: DRChoksey

Deven Choksey Research Report

DAM Capital Advisors Ltd. will launch its initial public offering on December 19 and the offer closes for subscription on Dec. 23. India's leading and rapidly growing merchant bank has fixed the price band in the range of Rs 269 to Rs 283 per share.

The Rs 840.25 crore issue is an entirely offer-for-sale of 2.97 crore shares. Since the IPO is entirely an OFS, proceeds from the offer will go directly to the selling shareholders.

The shares will be listed on the National Stock Exchange and the BSE on Dec. 27.

Outlook and Valuation:

DAM Capital Advisors is positioned as a leading player in India's merchant banking space with multiple strong growth triggers. DAM Capital stands out due to its well-diversified business model, encompassing equity capital markets, institutional equities, and advisory services.

The company has demonstrated a consistent improvement in market share, growing from 8.2% in FY21 to 12.1% in FY24 in terms of IPO and QIP issuances. The company's robust financial performance, reflected in its high profitability margins and revenue growth, highlights its operational efficiency and market positioning.

At the upper end of its IPO price band of Rs 283, the company commands a valuation of 28.4 times P/E, which is reasonable in light of its stellar growth metrics in revenue, Ebitda, and PAT, boasting the highest CAGR in its sector.

By concentrating on high-margin merchant banking, the company distinguishes itself from competitors that predominantly engage in lower-margin businesses like retail broking, making it a compelling investment opportunity. DAM Capital's capacity to navigate changing market conditions, along with a robust pipeline of deals and a growing presence in the capital markets, positions it well to leverage the expanding opportunities within India's financial ecosystem. Given these factors, we assign a ‘Subscribe’ rating to the IPO.

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