IPO Analysis Future Capital Holdings Limited - Indiabulls

 

The IPO for Future Capital Holdings Limited is open for subscription. For applying IPO Online Click Here . Issue Details   Issue Open 11/01/2008   Issue Close 16/01/2008   Issue Size 64,22,800 Equity Shares   Issue Type Book Building   Face Value Rs.10/-   Price Range Rs. 700/- to Rs. 765/-   Tick Size Re.1/-   Market Lot 8   Minimum Order Qty 8   Listing Stock Exchange Mumbai, NSE   Registrar To The Issue Intime Spectrum Registry Ltd.   Book Running Lead Managers Kotak Mahindra Capital Co. Ltd., Enam Securities Pvt. Ltd., JM Financial Consultants Pvt. Ltd. and UBS Securities India Pvt. Ltd. Analysis of Future Capital Holdings Limited Company Background Future Capital Holdings Ltd. (FCHL) was originally incorporated as KB Infin Pvt. Ltd. in 2005. Subsequently it was converted into public company as KB Infin Ltd in 2006 and then its name was changed to the present in December 2006. FCHL is the financial services arm of the Future Group and its three primary lines of businesses are investment advisory & asset management, retail financial services and research. FCHL provides private equity and real estate investment advisory services to onshore and offshore clients. These investment advisory services include investment analysis, research and recommendations. FCHL's retail financial services segment offers "Future Money", which was launched with the objective of becoming one of the leading retailers of financial products and services in India. FCHL's research segment includes research business, conducts and publishes economic research on India with the objective of enhancing value creation across its other businesses. FCHL will commence the distribution of financial products, including credit cards. It has entered into an agreement with ICICI Bank for marketing and distribution of the "Future Card". FCHL also intends to become a corporate agent for Future Generali India Assurance Co. Ltd. for general insurance products and Future Generali India Insurance Co Ltd. for life insurance products. Post issue promoters & promoter's group shareholding will reduce to 75.44% from existing 83.97%.. Object of the issue To expand its retail financial services business, in particular, the growth of loan portfolio. To meet the long term working capital requirements of the company. To meet issue related expenses and general corporate purpose. Strengths FCHL is promoted by Pantaloon Retail (India) Ltd.(PRIL), the flagship company of the Future Group which is a business group focusing on consumption led businesses in India. Within two years of operation the company's operating income stood at Rs.38.96 crores in FY07. Till 30th September, 2007 (half-year) its operating income stood at Rs.31.2 crores.. Weakness Two of its subsidiaries had a negative net worth in the past three years. Indivision Investment Advisors Ltd. had a negative net worth of Rs.2.14 crores in FY06. Myra Mall Management Co. Ltd. had a negative net worth of Rs.0.65 crores as of September 30, 2007 and Rs.0.29 crores in FY07. FCHL is having negative cash flow from operations amounting to Rs.9.74 crores for FY07. Valuation Net profit stood at Rs.4.68 crores in FY07. Till 30th September, 2007 (half-year) company having net loss of Rs.12.21 crores mainly due to increase in its operating expenses for expansion. OPM & NPM of the company was 21.21% & 12.02% in FY07 respectively. However, till 30th September, 2007 it stood at -20.37% & -39.14% respectively due to increased expenses for expansion during this period. ROCE & RONW of the company was 4.6% & 4.4% respectively in FY07. Till 30th September, 2007 it stood at -2.56% & -5.04%. Book value per share was Rs.23.96 in FY07. Till 30th September, 2007 the BV stood at Rs.42.62. EPS as on 31st March, 2007 stood at Rs.1.05.Annualised EPS (based on half year ended 30th September, 2007 net profit) for March, 2008 works out to Rs.-3.86. Debt to equity ratio of the company was 0.52 times in FY07. Till 30th September, 2007 it has reduced to 0.23 times due to issue of equity shares. Interest coverage ratio was 2.98 times in FY07. Till 30th September, 2007 its interest coverage ratio stood at -2.09 times. Debtors' turnover ratio was 2.64 times in FY07. FCHL's collection period was 138 days in FY07. Post issue PE (based on 31st March, 2007 EPS) will be Rs.1032.92 at upper price band & Rs.945.16 at lower price band. Industry average PE is Rs.22.86 as on 28th September, 2007. Peer Analysis ( For Half-year ended September, 2007) Company Sales Rs Cr Face Value (Rs) OPM % NPM % EPS Rs.. PE Times BV Rs FCHL 31.2 10 -20.37 -39.14 -2.15 - 42.62 Emkay Share & Stock Brokers Ltd. 46.08 10 40.52 24.67 4.01 36.01 48.87 Apollo Sindhoori Capital Investments Ltd. 48.70 10 41.22 20.61 20.09 9.74 58.72 Geojit Financial Services Ltd. 71.81 1 47.86 29.87 1.22 36.37 10.2 Source: CMIE Disclaimer : This information shall not constitute or form any part of any offer or invitation to subscribe for, underwrite or otherwise acquire, or any solicitation of any offer to purchase or subscribe for, securities in India or any other jurisdiction. This Service is not intended to be any form of an investment advertisement or advice. The information provided by Indiabulls is a pure statement of facts and does not contain any unpublished information. 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