Expect Inventure Growth to list at huge discount: Expert

Sunil Matkar

Moneycontrol.com

Mumbai based broking firm Inventure Growth and Securities will be listing its equity shares on the exchanges on Thursday, August 4. The company had managed to get good subscription and the issue price is set at the higher end of price band of Rs 100-117 a share.

However, experts are not too happy with the issue and feel it should have been way below the issue price. Infact, Investment Advisor, SP Tulsian thinks that it is not worth more than 25% of issue price, which comes to around Rs 29 a share.

Rajesh Tambe, Research Patner at Suresh Rathi Securities also feels that the listing price may not be more than Rs 50. According to Tambe, selling pressure will be seen in this share.

Experts reason that weak market conditions, available at high price to earnings ratio compared to listed players have weakened interest in Inventure Growth. There is also a concern since some broking houses are seen shuting businesses.

IPO analyst Arun Kejriwal said, "The income from operations for the company has dropped significantly and the present broking scenario is not very conducive. There has been substantial downsizing in a large number of brokerage houses and there have been some of these which have shut shop completely in recent times. Cash market turnover on the NSE has dropped below the Rs 10,000 crore mark on a daily basis which till a year ago used to average over Rs 15,000 cr on a daily basis. This drop is significant and is a cause of worry going forward."

Inventure had reported income from operations at Rs 31.16 crore in FY11 - lower as compared to Rs 39.26 crore in the previous year. Even the net profit declined nearly 58% to Rs 6.19 crore.

Peer comparison

For the comparision, Motilal Oswal Financial Services' FY11 net profit went down 21.4% to Rs 137 crore and net profit of Geojit BNP fell 34.4% to Rs 31.45 crore as compared to FY10.

Even on the market cap basis, Emkay Global enjoys market cap of Rs 105 crore at current price while the FY11 sales of the company stood at Rs 131.72 crore. Motilal Oswal has market cap of Rs 1409 crore whereas sales turnover of Rs 589.85 crore.

Geojit BNP enjoys market cap of Rs 485.27 crore while the sales turnover was Rs 257.29 crore. Inventure has asked for market cap of Rs 245.70 crore i.e. 8 times to FY11 sales turnover of Rs 31.16 crore.

sunil.matkar@network18online.com