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SPS Finquest Ltd IPO Review (Avoid)

Review By Dilip Davda 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.


Conclusion / Investment Strategy

 

Avoid this highly priced issue that also has entry barrier. 

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on May 14, 2014

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.

Email: dilip_davda@rediffmail.com

SPS Finquest IPO FAQs

  1. 1. Why SPS Finquest IPO?

    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.

  2. 2. How is SPS Finquest IPO?

    Read the SPS Finquest IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. SPS Finquest IPO what should investors do?

    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 in the above answer.

  4. 4. Is SPS Finquest IPO good?

    Our recommendation for SPS Finquest IPO is to avoid.

  5. 5. Is SPS Finquest IPO worth Investing?

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

  6. 6. When will SPS Finquest IPO allotment status?

    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.

  7. 7. When will SPS Finquest IPO list?

    The SPS Finquest IPO will list on Tuesday, June 3, 2014, at BSE SME.