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May 08, 2018 06:24 PM IST | Source: Moneycontrol.com

Avoid Indostar Capital Finance: ICICI Direct

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.

 
 
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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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