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IFL Enterprises BSE SME IPO review (Avoid)

Review By Dilip Davda on Mar 6, 2017

IFL Enterprises Ltd (IFL) is a subsidiary of India Finsec Limited, and represents the other business activities of the group. IFL is engaged in the business of corporate advisory, debt syndication and execution services with paramount focus on small and medium enterprises (SMEs) in corporate and non-corporate sector. Further the company is also involved in the business of trading in textile products primarily fabrics. It has obtained Direct Selling Agency (DSA) of PNB Housing Finance, Tata Capital Housing Finance Limited, and IDFC Bank and is in process of obtaining DSA for ICICI Bank, Axis Bank, IDBI Bank and India Bulls. Due to these DSAs and company's strong network amongst the debt finance market; it mentors and helps small and medium enterprises to raise banking and institutional finance.

To part finance its repayment of unsecured loans and raise general corpus fund, the company is coming out with a maiden IPO of 1626000 equity share of Rs. 10 each at a fixed price of Rs. 20 per share to mobilize Rs. 3.25 crore. Issue opens for subscription on 07.03.17 and will close on 10.03.17.Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Aryaman Financial Services Ltd and Skyline Financial Services Pvt Ltd is the registrar to the issue. The company has issued MoU equity at par with a face value of Re. 1 and then at a price of Rs. 40 per share (Re. 1 FV) in March 2009. In March 2016 it issued equity with a FV of Rs. 10 at a price of Rs. 25 per share. It has also issued bonus shares in the ratio of 12 for 1 in February 2016 and in the ratio of 1 for 4 in October 2016. Its current paid up equity capital of Rs. 1.38 crore will stand enhanced to Rs. 3.00 crore post issue.

On performance front, the company has posted revenue/net profits of Rs. 0.08 cr. / Rs. 0.002 cr. (FY14), Rs. 0.8 cr. / Rs. 0.004 cr (FY15) and Rs. 0.39 cr. / Rs. 0.13 cr. (FY16). For first six months of the current fiscal it has posted net profit of Rs. 0.09 crore on a revenue of Rs. 1.86 cr. If we annualize these earnings and attribute to fully diluted equity post issue, then asking price is at a P/E of 33 plus compared to peers trading around 11 P/E and thus making it a costly bet.

On merchant banker's front, in last three years till date this is the 12th mandate and earlier mandates have shown mixed trends.

Conclusion: Considering track record and the aggressive pricing, only cash surplus risk savvy investors may consider investment for long term.


Conclusion / Investment Strategy

Considering track record and the aggressive pricing of IFL Enterprises BSE SME IPO, only cash surplus risk savvy investors may consider investment for long term.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Mar 6, 2017

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 prior to making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well informed investors to participate is such offers. With crazy recent listings, SME IPOs have started drawing attention of investors across the board. However, as SME issues have entry barriers and continued low preference from broking community, any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on information available as on date coupled with market perceptions. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

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.

Email: dilip_davda@rediffmail.com

The IFL Enterprises IPO Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered IPO Analysts tells you if IFL Enterprises IPO worth investing. The IFL Enterprises IPO Note sets the IPO expectations in systematic way which tells you if IFL Enterprises IPO good to buy (good or bad / yes or no). The IPO Forecast tells you weather to invest in IFL Enterprises IPO by providing IPO recommendations i.e. subscribe, avoid and neutral.


1 Comments

vimal
1. vimal  Mar 18, 2017 16:25 Reply
How many price for listing-IFL Enterprises ?



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