Franklin Leasing SME IPO Review by Dilip Davda (Avoid)

Review By Dilip Davda on Mar 29, 2016

An IPO that was originally planned for entry in primary market from 30.09.15 to 06.10.15 and then stood withdrawn is now gearing afresh for its float. Details of the same are as under:

Franklin Leasing & Finance Ltd (FLF) is a a Non Deposit taking Non-systemically Important Non Banking Finance Company (NBFC-ND-NSI) registered with RBI to carry on NBFC Activities under Section 45-IA of the Reserve Bank of India Act, 1934. It is primarily engaged in the business of advancing loans and investing/trading in securities. FLF has commenced a process of improving its internal systems including but not limited to Trading Strategies, Financial Discipline and better utilization of fund based portfolio.

To meet its rising operational fund requirements, it is coming out with a maiden IPO of 4224000 equity share of Rs. 10 each at a fixed price of Rs. 15 per share to mobilize Rs. 6.34 crore. Issue opens for subscription on 30.03.2016 and will close on 05.04.2016. Minimum application is to be made for 8000 shares and in multiples thereon, thereafter. Issue is lead managed by Aaryaman Financial Services Ltd and Skyline Financial Services Pvt Ltd is the registrar to the issue.

Having issued equity capital at par since inception till the year 2000, it issued fresh equity at a price of Rs. 5000 per share (on Rs. 100 face value with a premium of Rs. 4900 per share) in March 2010 and March 2011. It issued bonus shares in the ratio of 15 for 1 in January 2015. Its current paid up equity capital of Rs. 11.56 crore will stand enhanced to Rs. 15.78 crore post IPO. Post allotment, shares will be listed on BSE SME.

On performance front, it has posted an average EPS of Rs. 0.19 for last three fiscals. For FY15 it has earned net profit of Rs. 0.35 crore on a total income of Rs. 1.85 crore posting an EPS of Rs. 0.30. For first half ended on 30.09.15 it has posted net profit of Rs. 0.32 crore on a total income of Rs. 1.04 crore. If we attribute these earnings on fully diluted equity post IPO then resultant EPS will be Rs. 0.41 and thus asking price is at a P/E of 37 plus. Considering its NAV as on 30.09.15 of Rs. 25.94, it is issuing equity at a P/BV of 0.6. In absence of any revision in prospectus that is still of the old date, there are no changes in above data.

On merchant banker's front, this is 12th SME IPO from its stable as per revised prospectus for this IPO and all past mandates has poor track records.

Conclusion / Investment Strategy

There is no harm in giving a miss to this expensive offer.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Mar 29, 2016

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).

About Dilip Davda

Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.


Franklin Leasing IPO FAQs

  1. 1. Why Franklin Leasing IPO?

    The initial public offer (IPO) of Franklin Leasing and Finance Ltd offers an early investment opportunity in Franklin Leasing and Finance Ltd. A stock market investor can buy Franklin Leasing IPO shares by applying in IPO before Franklin Leasing and Finance Ltd shares get listed at the stock exchanges. An investor could invest in Franklin Leasing IPO for short term listing gain or a long term.

  2. 2. How is Franklin Leasing IPO?

    Read the Franklin Leasing IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Franklin Leasing IPO what should investors do?

    Franklin Leasing IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Franklin Leasing IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is Franklin Leasing IPO good?

    Our recommendation for Franklin Leasing IPO is to avoid.

  5. 5. Is Franklin Leasing IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Franklin Leasing IPO.

  6. 6. When will Franklin Leasing IPO allotment status?

    The Franklin Leasing IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Franklin Leasing IPO allotment status to check.

  7. 7. When will Franklin Leasing IPO list?

    The Franklin Leasing IPO will list on Wednesday, April 13, 2016, at BSE SME.
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