Canara Robeco AMC Shares Crash 11% as Q2 Net Profit Slips 20%
Recently listed Canara Robeco AMC experienced a sharp decline in its stock value, dropping as much as 11.3% to a day’s low of Rs 311 on October 28. This downturn followed the company’s subdued Q2 earnings report for the quarter ending September 30.
Key Financial Highlights:
– Net Profit: The company’s net profit fell by 20% to Rs 49 crore, down from Rs 50 crore in the same quarter last fiscal year.
– Revenue from Operations: Reported at Rs 107.7 crore, this marks a modest increase of 3% from Rs 104.5 crore year-over-year.
– EBITDA: There was a significant 17% decline in earnings before interest, tax, depreciation, and amortization (EBITDA), summarized at Rs 17 crore.
– EBITDA Margin: The margin contracted by 440 basis points, dropping from 68% in June to 63% for the latest quarter.
– Sequential Decline: Comparatively, revenue from operations decreased by 11% quarter-over-quarter, while net profit fell 20%, attributed to rising operational costs.
Despite the disappointing results, Canara Robeco AMC’s IPO investors maintain a significant profit margin, as the shares are currently valued 30% higher than the issue price of Rs 266 per share.
Market Performance:
– The stock initially debuted on October 16, listing at a 5% premium.
– Its Rs 1,326-crore IPO saw 25.9x subscription from Qualified Institutional Buyers (QIBs), along with notable interest from Non-Institutional and retail investors.
Analyst Outlook:
Industry experts, including Prabhudas Lilladher, have issued a Buy recommendation, setting a target price of Rs 320 per share. Analysts remain optimistic, citing potential growth as the equity market strengthens.
Company Overview:
Canara Robeco AMC, a joint venture between Canara Bank and Orix Corporation Europe NV, is India’s second-oldest mutual fund house. It manages a diversified portfolio across various asset classes, including equity, debt, and hybrid funds.
In summary, the recent performance of Canara Robeco AMC shares reflects a temporary setback influenced by its latest quarterly results. The company, however, retains a solid foundation for future growth, driven by market dynamics.