This post on IndoStar Capital Finance IPO tries to bring out consolidated brokerage views , Grey Market Premium, Anchor Investors, Subscription information. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to IndoStar Capital Finance IPO or not.
Related Posts: IndoStar Capital Finance IPO Review
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IndoStar Capital Finance IPO: Grey Market Premium etc.
08/05/18 Grey Market Premium Rs. 22-24 , Kostak : Rs. 300
Anchor Investors (AIs) portion in the Public Issue of IndoStar Capital Finance Limited 9,671,328 equity shares have been subscribed today by 28 AIs at Rs. 572/- per equity share. Anchor investors include East Bridge, Hedge fund managers Ward Ferry and Aurigin Capital Management, Myriad Asset Management and Jupiter South Asia Investment Co, BNP Paribas Arbitrage, SBI MF (Mutual Fund) HDFC MF, Aditya Birla Sunlife MF, HDFC Life Insurance, Edelweiss AIF, ICICI Lombard General Insurance Co, Max Life Insurance Co., Bajaj Allianz Life Insurance Co. were the other investors.
Consolidated opinion of Brokerages, Analysts, Business New Paper Reports, Management Views on IndoStar Capital Finance IPO .
Angel Broking: “At the upper end of the price band, ICFL is valued at 2.2x of Q3FY18 book value (Pre-IPO) and on post dilution basis at 1.9x of Book value. The strong sponsorship of Everstone and other shareholders, along with a wellcapitalised balance sheet and an experience and focused management provide an excellent base for the next level of growth. Based on the above positive factors we assign SUBSCRIBE rating to the issue.”
Aditya Birla Money: “Valuations are reasonable with PE of ~23x on FY18E EPS and P/ABV of ~1.9x for the company having strong RoA, adequate capital, strong management pedigree and is expected to deliver steady earnings growth performance.”
Choice Broking:“ ICFL’s demanding valuation at Rs52,130.8 mn is valued at P/ABV of 1.9(x) to FY18 annualized adjusted BVPS. At this valuation, it may look cheap compared to well managed NBFCs, however, ICFS is presently a corporate lender and does not have presence in retail business. Expecting strong retail loan growth at this juncture is not logical as the segment is highly competitive and ICFS does not have experience in retail credit. Considering all these parameters, we assign ‘Avoid’ rating to the issue.”
ICICIDirect: “At the IPO price band of 570-572, the stock is available at a multiple of 1.8x FY18E annualised BV (post issue) and ~23.6 x PAT at the upper end of the price band. Post issue market capitalization is priced at Rs. 5200 crore. Factoring in major proportion of wholesale portfolio with high real estate exposure, we recommend AVOID on the issue”
Religare: “IndoStar has delivered healthy CAGR of 22% and 23.4% on Revenue and Net profit front respectively over FY14-17. With stable asset quality, strong risk management system, experienced management and strong presence across different financing verticals, the company is well placedto remain one of the preferred NBFCs. Going forward, it aims to expand into new geographies, offer new products and maintain its asset quality. At the upper price band of Rs 572, the stock is available at post issue P/BV of ~1.8x.“
SBICAP Securities Analyst : “On a post-issue basis, the IPO is priced reasonably at about two times its book value, as of December. “Given the NIM level, return on equity and assets and future earnings visibility, mainly due to vehicle finance, the valuation is very attractive as compared to peers.”
SMC: “Indostar Capital Finance Ltd. (ICFL) is a leading non-banking finance company (“NBFC”) registered with the Reserve Bank of India as a systemically important non-deposit taking company. Though the company has four diversified business segment namely Corporate lending, SME lending, Vehicle finance and Housing finance but it has negligible presence in Vehicle finance and Housing finance business. On the flip side the SME financing business has witnessed a stupendous growth in business within a shorts period of time. The SME lending business accounted for 0.2%, 5.2%, 12.4% and 22.7% of its Total Credit Exposure for the fiscal 2015, 2016 and 2017 and nine month period ended December 31, 2017, respectively. A long term investor may opt the issue.”
SP Tulsiyan Site: “At Rs. 572 per share, company’s market cap will be Rs. 5,213 crore, which, on post-money basis, leads to PBV multiple of 1.8x, based on expected BVPS of Rs. 310, as of 31-3-18. On one year forward basis, the PBV multiple is only 1.7x which is one of the cheapest in the listed NBFC space. Most peers specializing in SME lending such as Shriram City Union and Capital First are ruling at PBV multiples of 2x and above, with comparable RoEs (in low teens), similar asset quality and growth rates. Even L&T Fin, with over 50% book made up of wholesale loans, is ruling at PBV multiple of 2.5x, with net NPAs of 2.34% and RoE of 15%. More well-established and bigger NBFCs such as Sundaram, Cholamandalam, M&M Fin, Shriram Transport are obviously ruling much higher, at 2.5x-4x range. Thus, valuation of Indostar Capital is attractive, and partly addresses the risk of higher real estate exposure and entry into newer verticals.”
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.