Choice Equity Broking 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 4, 2018.
• Indostar Capital Finance Limited (ICFL), established in 2009, is a leading NBFC lending to mid-to-large sized corporates in
manufacturing, services and infrastructure industries and real estate developers of residential and commercial building projects.• The company has recently ventured into other segments such as
housing finance and vehicle financeBelow are few key observations of the issue:
• ICFL is only a nine years old NBFC, commenced business in 2011 in order to leverage the growth opportunities in the corporate lending space. Started business with the upfront capital to the tune of Rs9 bn, ICFL is promoted by Indostar Capital. Everstone Capital, a leading private equity player is the lead investor of Indostar Capital holding 51.2% stake (pre-issue). Post issue after a OFS of Rs18.4 bn and fresh issue of Rs7 bn, promoter stake will reduce from 91.6% (pre-issue) to 59.0%.
• The company has started operations with focus on corporate segment under which it provide loans to mid-to-large sized companies in the manufacturing, services and infrastructure industries and real estate developers executing residential and commercial projects.
At the higher price band of Rs572, ICFL’s share is valued at P/ABV multiple of 1.9(x) (to its post issue FY18 annualized adjusted BVPS).
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