DAM Capital Advisors is one of India’s leading investment banks, having grown rapidly in terms of revenue with an impressive CAGR from Fiscal 2022 to Fiscal 2024. It holds a 12.1% market share in terms of the number of initial public offerings (IPOs) and qualified institutional placements (QIPs) it has handled as a book-running lead manager in Fiscal 2024. With strong financial performance and a high profit margin, DAM Capital is now seeking to raise ₹840.25 Crores through an Offer for Sale in its upcoming IPO.

IPO Details

• Offer Size: ₹840.25 Crores, consisting entirely of an Offer for Sale of 2.97 Crores Shares.
• Price Band: ₹269 to ₹283 per equity share.
• Market Capitalization: At the upper price band of ₹283 per share, the market capitalization will be ₹2,000.41 Crores.
• Lot Size: 53 shares.
• Minimum Investment: ₹14,999 for retail investors, and ₹2,09,986 for High Net Worth Individuals (HNIs), based on the lot size.
• IPO Subscription: The IPO was 82.08 times oversubscribed on the final day, reflecting substantial investor interest.

Financials and Valuation

As of September 30, 2024, DAM Capital reported revenues of ₹1,077.52 Million for the period. The EBITDA stood at ₹623.59 Million, and the Profit after Tax (PAT) was ₹437.80 Million. Over the past few years, the company has demonstrated strong growth, with PAT increasing significantly from ₹86.74 Million in FY 2023 to ₹705.23 Million in FY 2024.

The IPO comes at a pre-issue P/E ratio of 28.36x and a post-issue P/E ratio of 28.37x, which is slightly higher than the industry P/E of 24x. However, the company's Return on Capital Employed (ROCE) and Return on Equity (RoE) of 72.7% and 58.72% for FY 2024, respectively, suggest that the IPO is fairly priced and could offer good returns.

Grey Market Premium (GMP)

The GMP for the DAM Capital Advisors IPO is currently ₹80, implying a 28.27% potential listing gain. However, it is important to note that GMP is based on unregulated market trends and can fluctuate significantly. Therefore, while it suggests strong listing gains, it should not be solely relied upon for investment decisions.

Objectives of the IPO

The proceeds from the Offer for Sale will not be received by DAM Capital Advisors but by the Selling Shareholders. These funds will be distributed after deducting the relevant expenses and taxes associated with the offer.

Investment Outlook

DAM Capital Advisors is one of the fastest growing investment banks in India, with strong revenue and profitability growth. The company's high GMP indicates strong investor interest and potential for listing gains. Given the company’s solid financials, strong market position, and high profit margins, the IPO presents an opportunity for risk-tolerant investors to apply for potential listing gains.

With its strong market share, impressive financial growth, and a highly favorable GMP, we recommend that risk-seeking investors consider applying for the DAM Capital Advisors IPO, particularly for short-term listing gains. However, investors should be cautious about the relatively high P/E ratio compared to the industry average and ensure they are comfortable with the inherent risks.

The Upcoming IPOs in this week and coming weeks are Citichem India, Indo Farm, Technichem Organics, Leo Dry Fruits, Solar91 Cleantech, Rosmerta Digital and Avanse Financial.

The Current active IPO is Anya Polytech and Unimech Aerospace.

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