Review By on May 14, 2014
SPS Finquest Ltd is and NBFC engaged in granting loans against securities and also in financing investments and trading in securities and thus is in high risk low income field. To augment its capital base and repayment of high cost debt the company is offering 3344000 equity share of Rs. 10 each at a fixed price of Rs. 75 per share to mobilize Rs. 25.08 crore. The issue opens for subscription on 21.05.14 and will close on 23.05.14. Minimum application is to be made for 1600 shares and in multiples thereof, thereafter. Post issue promoters holding will come down from 99% to little less than 38%. Shares will be listed on BSE SME after allotment. Out of issue proceeds, Rs. 24.73 crore will be used for part repayment of loan of Rs. 61.38 crore taken from a shareholder named Shapoor Mistry at 11% p.a. coupon rate.
The company issued all equity to promoters at par till 2010. In November 2010 it issued just 100 shares at a price of Rs. 25 per share and in January 2014 it issued bonus in the ratio of 2 for 1 to take the equity capital from Rs.0.39 crore to Rs. 1.16 crore. Post issue the equity capital will rise to Rs. 4.50 crore. For the fiscal 2012-13 it earned net profit of Rs. 0.44 crore on a income of Rs. 7.87 crore on an equity base of Rs. 0.39 crore. For nine months ended 31.12.13 it has earned net profit of Rs. 0.63 crore on a income of Rs. 5.98 crore on the same equity. If we attribute these earnings on post issue equity of Rs. 4.50 crore then the EPS stands at Rs. 1.87 and based on it the asking price is at a P/E of 40 plus and thus is a highly priced IPO.
Issue is solely managed by Networth Stockbroking Ltd and Universal Capital Securities Pvt Ltd is the registrar to the issue. As far as Lead manager is concerned, this is the third SME IPO from them and earlier two IPOs have given good returns, but that is purely on market making gimmicks and not on fundamentals. Risk aver investors having surplus funds may take a chance.
Avoid this highly priced issue that also has entry barrier.
Review By on May 14, 2014
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
The initial public offer (IPO) of SPS Finquest Ltd. offers an early investment opportunity in SPS Finquest Ltd.. A stock market investor can buy SPS Finquest IPO shares by applying in IPO before SPS Finquest Ltd. shares get listed at the stock exchanges. An investor could invest in SPS Finquest IPO for short term listing gain or a long term.
Read the SPS Finquest IPO recommendations by the leading analyst and leading stock brokers.
SPS Finquest IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the SPS Finquest IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is SPS Finquest IPO?"
Our recommendation for SPS Finquest IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the SPS Finquest IPO.
The SPS Finquest IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit SPS Finquest IPO allotment status to check.
