IndoStar Capital Finance makes strong debut, lists at 5% premium against issue price
IndoStar share price gained as much as 6 per cent to Rs 606 on the BSE against its issue price. At 10:30 am, IndoStar was trading at 591.45, up 3 per cent against its issue price, and down 1 per cent against its opening price.
IndoStar Capital Finance made a strong debut on the bourses by listing at Rs 600, a 5 per cent premium to its issue price of Rs 572. On NSE too, the scrip listed at Rs 600. IndoStar stock gained as much as 6 per cent to Rs 606 on the BSE against its issue price. At 10:30 am, IndoStar was trading at 591.45, up 3 per cent against its issue price, and down 1 per cent against its opening price.
The Rs 1,844-crore initial public offer of non-banking finance company Indostar Capital Finance was subscribed 6.80 times during May 9-11.
The IndoStar IPO was of fresh issue of up to Rs 700 crore and an offer for sale of up to 2 crore equity shares (including anchor portion of 9,671,328 equity shares). OFS largely offered exit to early investors namely Everstone (PE), Sandeep Baid, Vimal Bhandari, Shailesh Shirali and few others.
Price band for the IndoStar offer was fixed at Rs 570-572 per share. Most brokerages had recommended 'subscribe' on the issue.
"At the upper end of the price band (Rs 570-572) the issue is valued at 2.1x FY18 BV. We believe that the valuation is fair and commensurate with low RoEs. While the growth will pick up in coming years aided by scaling up of retail segments, RoE is likely to remain suppressed in the near to mid term due to over capitalisation. Hence, we recommend investors subscribe with a long-term perspective," said brokerage PhillipCapital in its IPO note.
However, Antique Stock Broking had recommended 'avoid' on the issue, as it finds IndoStar a late entrant as far as LAP, vehicle finance and housing finance is concerned. A lot hinges on the company's ability to retain talent and create niches in these segments, it said. But it did acknowledge the only silver lining to the IPO is the reasonable valuation.
JM Financial, Kotak Mahindra Capital Company, Morgan Stanley India, Motilal Oswal Investment Advisors and Nomura Financial Advisory and Securities (India) managed the IndoStar IPO.
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