ICICI Direct has come out with its report on Indostar Capital Finance Ltd. The research firm has recommended to "Avoid" the IPO in its research report as on May 8, 2018.
Strong corporate lending business Indostar has a strong corporate lending business (3969 crore) and SME loans ( 1173 crore) and recently started vehicle finance and housing finance. Corporate wholesale book consists of (i) lending to midto large sized corporate in manufacturing, services and infrastructure industries, by way of senior secured debt,
structured financing, promoter financing and special situation funding and (ii) lending to real estate developers, mainly for financing project level construction of residential and commercial building projects (~1886 crore).Valuation
At the IPO price band of 570-572, the stock is available at a multiple of 1.8x FY18E annualised BV (post i ssue) and ~23.6 x PAT at the upper end of the price band. Post issue market capitalisation is priced at ~| 5200 crore. Factoring in major proportion of wholesale portfolio with high real estate exposure, we recommend AVOID on the issue
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