IndoStar Capital Finance, a non-banking finance company will open its IPO issue for public subscription on May 9 and close on May 11. The company has plans to raise as much as Rs. 2000 crore, of which Rs.700 crore fresh capital shall be raised from the primary market. The price band of the issue is fixed between Rs. 570 to Rs. 572 per share with Rs. 10 face value.
Investors can bid for a minimum of 26 shares which considering the upper end of the price band amounts to as much as Rs 14,872. The shares of the company are proposed to be listed on both the NSE and BSE.
Anchor investor allocation will be executed one day before the IPO subscription opening date i.e. today.
Company profile: The NBFC company established in the year 2010 extends structured term financing facility to SMEs as well as corporates. The company only recently through its wholly-owned subsidiary IndoStar Home Finance Pvt has ventured into providing housing and vehicle finance.
IPO Objective: The net proceeds mopped up from the issue will be put to augment the company's capital base for meeting future cash flow needs.
Financials: The company reported profit after tax at Rs 164.08 crore for quarter ended December of the FY18 in comparison to Rs 210.8 crore year-on-year. Total income of the company also declined to Rs 585.95 crore from Rs 719.92 crore YoY.
The disbursal of gross loan increased at Rs 4,903.4 crore in the five years to FY17 by 14.4% p.a. Gross NPA assets as a percentage of total advances (GNPA) increased to 1.7% in the nine months time to December 2017. But the yield in the coming days will get a support from the company's increasing focus on affordable home and vehicle finance. At the same time, the company's asset uality is likely to improve.
Valuation: Compared to other listed peers in the secondary market, the IPO issue of Indo Star Capital is being offered at a price to book (P/B) multiple of 1.9. Though, the yield and asset quality of the company is not encouraging, the company's increasing focus in the retail segment makes the issue a good bet for long-term perspective.