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Future Ventures India Ltd IPO Review (Apply)

Review By ARM Research Pvt. Ltd. on April 26, 2011

  • Total Issue of Shares (Cr): 68.18- 75.00
  • QIB Investors (Cr): Up to 50% Equity Shares
  • Non -Institutional Investors (Cr): At least 15% Equity Shares
  • Retail Investors (Cr): At least 35% Equity Shares
  • Issue opens on: 25th Apr,2011
  • Issue closes on: 28th Apr,2011
  • Price Band (Rs.): 10-11
  • Lot size (No. of shares) and multiple: 600
  • Face Value (Rs): 10.00
  • Issue Size (Rs in Cr.): 750- 825
  • Equity Shares outstanding prior to the Issue (mn): 826.2 Equity Shares
  • outstanding after the Issue (mn): 1576.2

FVIL is the part future group which is led by Kishore Biyani. It seek to create build, acquire, invest in and operate innovative and emerging businesses in growing 'consumption- led' sectors in India. This sector growth is depended on the growing purchasing power of Indian consumers and their changing lifestyle and spending habits. Within this consumption- led segment, it intends to focus primarily on (i) Fashion (ii) FMCG (iii) Food processing (iv) Home Products (v) Rural distribution and (vi) Vocational education.

In addition to allocating and providing capital, it intends to operationally mange and strategically mentors these businesses.

Valuation & Outlook

P/B ratio is currently at 1.23x multiples on the higher band of IPO price & 1.12x on lower end of IPO price. The Book value of MFL is Rs 8.94 as on 31th Dec, 2010.

Investment Rationale

  • Since there is no strict comparable in this segment so peer comparison can't be done. However, we believe the issue is attractively priced at 1.23 times 9MFY11 post issue book value, at the upper band.
  • FVIL would benefit from the growth opportunities available in the consumer sector. And it has also experience in retail sector and would add value to its business ventures.
  • Considering the issue at face value, growth of consumerism & branded products.
  • These Business Ventures are at nascent stage and when they get mature can give huge return to the company. Investments accounted for 89% of FVIL's asset book.

Conclusion / Investment Strategy

We recommend short Investors with high risk appetite to "subscribe" for listing gains while long term investors are advised to hold the stock for 3 years duration since FVIL can prove to be a "Multi bagger stock" and can give phenomenal returns.

Reviewer recommends Subscribing to the issue.

Review By ARM Research Pvt. Ltd. on April 26, 2011

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