The IPO has opened today, July 20, 2011. The company is issuing 70 lakh equity shares of Rs 10 each, in the price band of Rs 100 to Rs 117 per share, to raise funds around Rs 80 crore. The issue, comprising a dilution of 33.33%, closes on July 22.
Inventure Growth has operations mostly in the western region. The IPO has beeen timed wrongly under present market conditions, since most brokerages are down-sizing operations and barely managing to stay afloat due to intense competition and meagre income.
IGSL has had a tepid growth for FY11. In the last 3 years the CAGR of the company is only 4%. Also the company does not have any investment banking or corporate advisory division, which can support it with high fee income, in these thin retail volume days.
For FY11, company reported an EPS around Rs 4, on equity of Rs 14 crore. At upper end of the price band at Rs 117 per share is being issued at a PE multiple of 26 times! This is too high given that brokerages of much better scale and size, are ruling at much lower PE.
In 2010, Microsec Financial Services, a Kolkata based brokerage firm had gone public. As against the issue price of Rs 118, the shares are trading around Rs 38. Even the larger brokerages such as Edelweiss Capital, MotilalOswal and Emkay Global and others have disappointed the investors.
ICRA has awarded grade 2 to the IPO indicating below average fundamentals. The BRLM – Intensive Fiscal Services is unknown. One more poor quality IPO, which has been priced at its FY 2015 earnings.
Considering all of these information it is best to say that this subscription should be avoided.