(1) Recent pre ipo placement was done at 55.
(2) Price band (51-59) is huge which is not expected from a company like L&T.
Somehow I am not getting interested to this ipo. Seeing old ipos on finance like PTC etc. Even if i subscribe it will be for small 3-5 lot so that i get few shares rather than big position. Chances of cornering is less.
I still feel parent company is better and they haven't been broken just yet so that once this IPO goes through they can disassemble the parent and the finance from this company goes to them. Just a personal feeling.
Though there is a hype for this IPO but I think this will not repeat Reliance Power IPO. Afterall, after a very long time gap, L&T is coming with the IPO.
The IPO price band puts the price to book value between 1.7-1.9 times -- close to that of its NBFC peers like M&M Finance whose shares are quoting at 2.1-2.3 times, IDFC quoting at 1.7-1.8 times and Shriram Transport Finance at 2.4-2.6 times.
L&T Finance Limited is a subsidiary of L&T Finance Holdings Limited.
L&T Finance Holdings Limited is a pure holding company and thus should trade at a minimum 15% discount to similar finance companies.
Considering the fact that it's only a holding company, the IPO price seems slightly expensive.
Still, given its parentage, I think L&T Finance Holdings will list at a small premium.
The company has a diversified portfolio and is like any other NBFC. There is nothing special about the company.
40% of the loans have been given to infrastructure sector. (25% to power sector, 17.5% to roads sector, 17.5% to telecom sector).
Retail finance makes 37% of the loan book and 80% of the retail loans given in this segment are secured. The retail portfolio is well diversified too. For details, see the RHP.
IPO valuations are close to valuations that other NBFCs are trading at.
Based on FY 2011 consolidated earnings:
Pre-IPO book value = Rs 19.57.
Post-IPO book value = Rs 24.50.
Pre-IPO PE = 22.18.
Post-IPO PE = 25.32.
If the IPO gets subscribed 2-3 times, "investors" can apply for listing gains. I expect the stock to list 5%-7% above the IPO price.
10% of the IPO has been reserved for "L&T Shareholders".
Anyone knows who exactly is eligible for applying in this category and how many shares can one apply for in this category?
I can't find the answers in the RHP.
I found the answer to the first question.
From the RHP:
Quote:
L&T Shareholders i.e. individuals and HUFs who are equity shareholders of the Promoter, L&T (excluding such other persons not eligible under applicable laws, rules, regulations and guidelines) as at the date of the Red Herring Prospectus.
55-59 would have been more suitable. Smaller price band gives more confidence as having bigger bands ==> the company itself is not sure of how to value itself.
The L&T Finance Holdings company is a 95.94% subsidiary of L&T Limited, it is the holding company for the following three businesses conducted via wholly-owned subsidiaries:
L&T Finance – retail and corporate finance lending with loan book of Rs. 10,157 crore as of 31-03-11
L&T Infrastructure – infrastructure financing with loan book of Rs. 7,186 crore as of 31-03-11
L&T Investment Management – mutual fund business with AUM of Rs. 5,200 crore
So, as Alchemist mentioned, it might trade at a fair discount to other listed infra finance comps and NBFCs.
L&T Finance – retail and corporate finance lending with loan book of Rs. 10,157 crore as of 31-03-11.
L&T Infrastructure – infrastructure financing with loan book of Rs. 7,186 crore as of 31-03-11.
L&T Investment Management – mutual fund business with AUM of Rs. 5,200 crore.
L&T Investment Management is a subsidiary of L&T Finance, which is subsidiary of L&T Finance Holdings, which is subsidiary of L&T. .
The third subsidiary of L&T Finance Holdings is "India Infrastructure Developers Limited".
From the RHP:
Quote:
While we do not currently conduct any material financing operations through IIDL, we intend to begin doing so in the course of Fiscal Year 2012. Subject to applicable regulatory approvals, IIDL plans to support the working capital requirements of small and medium enterprises and of other corporate entities.
Can I apply for full 2 lakh in retail quota ? I just completed my studies and I am a non salaried person (will become one from September ) and my income has not crossed the tax limits (as of last year)
Somewhere I read that the income tax is going to scrutiny and check all applications above 1 lakh for any IPO. Though my records are straight, I don't want to have any trouble with income tax.
1:: Is L&T shareholders getting any shares of l&t finance by default or any preference like stuff?
2:: Also are there any chances of other listings too happening in the structure or are they getting demerged later as said before, asking just for reference purpose?
So guys what is your opinion I should go for the IPO or not ?
What should I expect from this IPO?
This is my opinion:
L&T Finance Holdings IPO is not undervalued. The price is slightly expensive compared to similar listed companies.
Two factors will determine whether the stock will list above the IPO price or below the IPO price.
- QIB subscription figure.
- Market conditions when the stock lists.
The listing price should be IPO price plus/minus 5%-7%
If the QIB subscription crosses around 7 times or the overall subscription crosses 5 times, I think it will be safe to apply for the IPO for listing gains.
Of course, the market risk will still be there.
The debt crises is US is a serious issue.
Even though there is almost zero probability of it happening, if for some reason the debt ceiling in US is not raised, a significant correction will take place in global financial markets. In such a scenario, the stock will surely list below the IPO price, no matter what the IPO subscription figures turn out to be.
I have applied for 1 full application via my broker (pen and paper) for tomorrow since being a L&T shareholder wasn't convinced whether online ASBA would work.
I have applied for 1 full application via my broker (pen and paper) for tomorrow since being a L&T shareholder wasn't convinced whether online ASBA would work.
Will also put in one half application.
Note: You can use the same demat account for both applications - one in the retail category and one in the shareholders' category. However, your bid amount should not exceed Rs 2 lac in either of the two categories.
I am still undecided about the IPO. I will apply (for listing gains) if the overall subscription crosses 3-4 times.
Even with the L&T tag the subscription level is not too high (3.2 times as of 2:45pm).
I am skipping it & don't want to take risk. All the best to those who have applied.
Ditto.Though i am positive about this ipo.
But really not at all positive about market sentiments right now and don't want to block any cash as i know my present portfolio is suffering and i don't wish to sell any stuffs(especially banking stocks) .
Reliance industries went today 52 weeks low. Canara bank Also went at all time low.
Plus shares like adani pulled down heavily by Lokayukta report (first time after ipo adani power went below its ipo price of 100).
Also sentiments about US doesn't look encouraging.
Best of luck to all of you who have applied even for listing gains.
Thanks Alchemist. I still did apply from different accounts since I did have the option. Also looking at the subscription it looks like it would have been better to put in 2 retail applications since I suspect Retail subscription will be less than 7 while Shareholders will definitely go above 2 times. But only the listing will tell us if it's a good thing or a bad one.
Quote:
Originally Posted by Alchemist
Note: You can use the same demat account for both applications - one in the retail category and one in the shareholders' category. However, your bid amount should not exceed Rs 2 lac in either of the two categories.
I am still undecided about the IPO. I will apply (for listing gains) if the overall subscription crosses 3-4 times.
L&T Finance Holdings IPO
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