Showing posts with label IPO. Show all posts
Showing posts with label IPO. Show all posts
July 27, 2011
L&T Fin IPO price too steep? Not at all, says Deosthalee 27-07-2011
L&T Finance Holdings, a wholly-owned arm of country's engineering bellwether Larsen & Toubro , on Wednesday said that valuations of its initial public offering (IPO), which has opened for subscription at a price band of Rs 51 to 59 per share, is justifiable as it houses two non-banking finace companies (NBFCs) that have grown in the recent past by approximately 50% year-on-year in the last couple of years.
Fundamentally, YM Deosthalee, CMD, L&T Finance Holdings explained, "The company's earnings were impacted on the back of hawkish provisioning made in 2010, and we need capital as the firm is witnessing rapid growth."
Currently, he added that the company's overall exposure in microfinace business stands at Rs 445 crore, which includes Rs 199 crore in Andhra Pradesh.
Furthermore, Deosthalee elaborated that the compay holds investments in Federal Bank and City Union Bank at book value, and exposure in infra finance is diversified.
Today, the firm received a commitment of Rs 152.7 crore from anchor investors at Rs 56 a share . Earlier, it had raised around Rs 330 crore through private equity from Capital International PE Fund through a pre-IPO placement.
Fundamentally, YM Deosthalee, CMD, L&T Finance Holdings explained, "The company's earnings were impacted on the back of hawkish provisioning made in 2010, and we need capital as the firm is witnessing rapid growth."
Currently, he added that the company's overall exposure in microfinace business stands at Rs 445 crore, which includes Rs 199 crore in Andhra Pradesh.
Furthermore, Deosthalee elaborated that the compay holds investments in Federal Bank and City Union Bank at book value, and exposure in infra finance is diversified.
Today, the firm received a commitment of Rs 152.7 crore from anchor investors at Rs 56 a share . Earlier, it had raised around Rs 330 crore through private equity from Capital International PE Fund through a pre-IPO placement.
Go for L&T Finance IPO at Rs 45, suggests Udayan 27-07-2011
Engineering and construction major Larsen and Toubro 's subsidiary company L&T Finance Holdings is set to open its initial public offering (IPO) for subscription on July 27. The company plans to raise about Rs 1,092 crore out of the total issue size of Rs 1,245 crore.
On one hand where investors have shown great response over this subscription of L&T IPO, some eyebrows have been raised about its pricing as well.
CNBC-TV18’s managing editor Udayan Mukherjee feels this as a very good pedigree household. He said, "The promoters in India are very smart. The problem with them is if they know that there is a premium which can be taken out of their pedigree or brand name, then they will always take it out in the IPO."
Mukherjee suggests going for the L&T Finance IPO at Rs 45. Mujherjee stated, "L&T has a lot of goodwill in the market. The IPO will still go through as it is L&T and not too many things come from that basket."
This stock has consistently created wealth for the shareholders. They have used to eek out a lot of premium from minority shareholders and prices the issue at a fairly lofty level. Mukherjee explained, "Given L&T’s goodwill in the market, they might have done well to do the issue at Rs 45 which would still be at a price to book of more than two times and then left the last Rs 8-10 for shareholders. Instead, they chose to do the issue on the Rs 20 book value at close to 2.8 times book."
"If you compare it with other non-banking financial banking companies (NBFCs) given their return ratios which is not the highest, it is probably a little bit of a lofty pricing. It is 30% premium to IDFC which is not a bad management," he added.
Mukherjee believes that the valuations are expensive with the credibility and pedigree of this organisation. Just like the pre IPO placement, the issue might go through.
Above a price of Rs 60, if the issue gets done at Rs 55-59 and goes to Rs 60-65 kind of prices, then it is more than three times book. There isn’t a single stock barring HDFC in our firmament which trades at more than three times book consistently.
Mukherjee calls it as lofty valuations as they haven’t left too much on the table. Post issue gains to remain a mystery despite its pedigree.
On one hand where investors have shown great response over this subscription of L&T IPO, some eyebrows have been raised about its pricing as well.
CNBC-TV18’s managing editor Udayan Mukherjee feels this as a very good pedigree household. He said, "The promoters in India are very smart. The problem with them is if they know that there is a premium which can be taken out of their pedigree or brand name, then they will always take it out in the IPO."
Mukherjee suggests going for the L&T Finance IPO at Rs 45. Mujherjee stated, "L&T has a lot of goodwill in the market. The IPO will still go through as it is L&T and not too many things come from that basket."
This stock has consistently created wealth for the shareholders. They have used to eek out a lot of premium from minority shareholders and prices the issue at a fairly lofty level. Mukherjee explained, "Given L&T’s goodwill in the market, they might have done well to do the issue at Rs 45 which would still be at a price to book of more than two times and then left the last Rs 8-10 for shareholders. Instead, they chose to do the issue on the Rs 20 book value at close to 2.8 times book."
"If you compare it with other non-banking financial banking companies (NBFCs) given their return ratios which is not the highest, it is probably a little bit of a lofty pricing. It is 30% premium to IDFC which is not a bad management," he added.
Mukherjee believes that the valuations are expensive with the credibility and pedigree of this organisation. Just like the pre IPO placement, the issue might go through.
Above a price of Rs 60, if the issue gets done at Rs 55-59 and goes to Rs 60-65 kind of prices, then it is more than three times book. There isn’t a single stock barring HDFC in our firmament which trades at more than three times book consistently.
Mukherjee calls it as lofty valuations as they haven’t left too much on the table. Post issue gains to remain a mystery despite its pedigree.
L&T Finance IPO: Should you go for it, or not? 27-07-2011
The IPO of L&T Finance Holdings, L&T Group’s financial services holding company, and a subsidiary of Larsen & Toubro, opened on July 27 at the price band of Rs 51-59 per equity share.
The Issue includes a reservation of equity shares for subscription by eligible employees aggregating up to Rs 50 crore and reservation of equity shares for subscription by L&T shareholders aggregating up to Rs 120 crore.
This is the biggest IPO issue of this financial year and the company expects to Rs 1,092 crore out of the total issue size of Rs 1,245 crore.
But given the weakness that has set in the market and the many headwinds the financial sector faces, is it a good idea to go for the IPO?
Brokerage Nirmal Bang has advised investors with long term perspective to 'subscribe' to the initial public offering of L&T Finance Holdings. "The issue looks fairly priced for the near term," the brokerage said, but warned that it does not offer a potential upside on listing.
Brokerage Sharekhan finds the valuatution reasonable as at 2.3x FY2011 book value, which is at a marginal premium to
players like IDFC, PFC etc though the business model is not strictly comparable. The company is present in high growth businesses (construction equipment finance, transport
equipment finance, infrastructure, micro finance and rural finance) through its four subsidiaries and would generate higher return on equity (RoE) in future.
"In addition the company is favourably placed in terms of funding due to high credit rating and a diversified funding mix which will aid margins," the brokerage said.
The bid/issue will close on July 29. The minimum bid lot is of 100 equity shares and in multiples of 100 equity shares thereafter. The anchor investor
bidding date was July 26. The company has raised around Rs 160 crore by selling shares to cornerstone investors on Tuesday.
The company in consultation with the joint global coordinators and book running lead managers, the book running lead managers and the co-book running lead manager, has decided to offer Rs 2 discount to the issue price for eligible employees.
The Issue has been graded by Credit Analysis & Research and ICRA and has been assigned "CARE IPO Grade 5" indicating "Strong Fundamentals" and "IPO Grade 5" indicating "Strong Fundamentals", respectively.
At least 50% of the net issue shall be allotted on a proportionate basis to qualified institutional buyers, provided that the company may allocate up to 30 per cent of the QIB portion to anchor investors on a discretionary basis out of which one-third shall be reserved for domestic mutual funds only. About 5 per cent of the net QIB Portion shall be available for allocation on a proportionate basis to mutual funds only, and the remainder of the net QIB portion shall
be available for allocation on a proportionate basis to all QIBs, including Mutual Funds, subject to valid Bids being received at or above the Issue Price.
Not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders subject to valid Bids being received at or above the Issue Price.
L&T Finance Holdings Limited is a financial holding company offering a diverse range of financial products and services through its subsidiaries. Its operations are arranged into four business groups, being the Infrastructure Finance Group, the Retail Finance Group, the
Corporate Finance Group and the Investment Management Group.
LTFH has four operating subsidiaries through which the different businesses are managed. These are L&T Finance Limited that focuses on asset financing in the corporate, retail and rural segments; L&T Infrastructure Finance Company Limited that focuses on infrastructure
financing; India Infrastructure Developers Limited that proposes to focus on working capital financing for corporate borrowers and L&T Investment Management Limited that operates a SEBI registered Mutual Fund business. LTFH is headquartered in Mumbai, and has presence in 23 states in India. As at May 31, 2011, it had 837 points-of-presence across India through its subsidiaries. Across its various business entities it employed 4,395 people as of May 31,
2011.
Key risks to the company includes its exposure to the microfinance sector. The company has microfinance institution (MFI) exposure of about Rs 400 crore of which the share of Andhra Pradesh is about 50 per cent. Regarding the MFI exposure, the company has made a provision of Rs60 crore during FY2011 of which Rs54 crore is for the loans expended to the state of Andhra Pradesh.
Another key macro concerns can affect the company’s performance. For example, a sharp increase in interest
rates may squeeze the margins and contribute to its NPAs.
(Disclaimer: All information provided on moneyguruindia.com pertaining to investing, stocks, securities must be understood as information and not investment advice. We advise all readers to seek advice from a professional investment adviser before making any investment decisions on the basis of any of our content. All reports, analysis, columns, statements or listings featured in the site are not meant to be solicitation or recommendation to buy, sell, or hold securities. We are merely providing information.)
The Issue includes a reservation of equity shares for subscription by eligible employees aggregating up to Rs 50 crore and reservation of equity shares for subscription by L&T shareholders aggregating up to Rs 120 crore.
This is the biggest IPO issue of this financial year and the company expects to Rs 1,092 crore out of the total issue size of Rs 1,245 crore.
But given the weakness that has set in the market and the many headwinds the financial sector faces, is it a good idea to go for the IPO?
Brokerage Nirmal Bang has advised investors with long term perspective to 'subscribe' to the initial public offering of L&T Finance Holdings. "The issue looks fairly priced for the near term," the brokerage said, but warned that it does not offer a potential upside on listing.
Brokerage Sharekhan finds the valuatution reasonable as at 2.3x FY2011 book value, which is at a marginal premium to
players like IDFC, PFC etc though the business model is not strictly comparable. The company is present in high growth businesses (construction equipment finance, transport
equipment finance, infrastructure, micro finance and rural finance) through its four subsidiaries and would generate higher return on equity (RoE) in future.
"In addition the company is favourably placed in terms of funding due to high credit rating and a diversified funding mix which will aid margins," the brokerage said.
The bid/issue will close on July 29. The minimum bid lot is of 100 equity shares and in multiples of 100 equity shares thereafter. The anchor investor
bidding date was July 26. The company has raised around Rs 160 crore by selling shares to cornerstone investors on Tuesday.
The company in consultation with the joint global coordinators and book running lead managers, the book running lead managers and the co-book running lead manager, has decided to offer Rs 2 discount to the issue price for eligible employees.
The Issue has been graded by Credit Analysis & Research and ICRA and has been assigned "CARE IPO Grade 5" indicating "Strong Fundamentals" and "IPO Grade 5" indicating "Strong Fundamentals", respectively.
At least 50% of the net issue shall be allotted on a proportionate basis to qualified institutional buyers, provided that the company may allocate up to 30 per cent of the QIB portion to anchor investors on a discretionary basis out of which one-third shall be reserved for domestic mutual funds only. About 5 per cent of the net QIB Portion shall be available for allocation on a proportionate basis to mutual funds only, and the remainder of the net QIB portion shall
be available for allocation on a proportionate basis to all QIBs, including Mutual Funds, subject to valid Bids being received at or above the Issue Price.
Not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders subject to valid Bids being received at or above the Issue Price.
L&T Finance Holdings Limited is a financial holding company offering a diverse range of financial products and services through its subsidiaries. Its operations are arranged into four business groups, being the Infrastructure Finance Group, the Retail Finance Group, the
Corporate Finance Group and the Investment Management Group.
LTFH has four operating subsidiaries through which the different businesses are managed. These are L&T Finance Limited that focuses on asset financing in the corporate, retail and rural segments; L&T Infrastructure Finance Company Limited that focuses on infrastructure
financing; India Infrastructure Developers Limited that proposes to focus on working capital financing for corporate borrowers and L&T Investment Management Limited that operates a SEBI registered Mutual Fund business. LTFH is headquartered in Mumbai, and has presence in 23 states in India. As at May 31, 2011, it had 837 points-of-presence across India through its subsidiaries. Across its various business entities it employed 4,395 people as of May 31,
2011.
Key risks to the company includes its exposure to the microfinance sector. The company has microfinance institution (MFI) exposure of about Rs 400 crore of which the share of Andhra Pradesh is about 50 per cent. Regarding the MFI exposure, the company has made a provision of Rs60 crore during FY2011 of which Rs54 crore is for the loans expended to the state of Andhra Pradesh.
Another key macro concerns can affect the company’s performance. For example, a sharp increase in interest
rates may squeeze the margins and contribute to its NPAs.
(Disclaimer: All information provided on moneyguruindia.com pertaining to investing, stocks, securities must be understood as information and not investment advice. We advise all readers to seek advice from a professional investment adviser before making any investment decisions on the basis of any of our content. All reports, analysis, columns, statements or listings featured in the site are not meant to be solicitation or recommendation to buy, sell, or hold securities. We are merely providing information.)
Subscribe to:
Posts (Atom)