Share indian securities SME IPO

(nitin goyal) #1

Share India Securities Ltd. (SISL) is currently engaged in the business of equity broking, investing and trading activities. Along with this the company is also providing the services as a Depository Participant, Research Analyst, Mutual Fund Advisor/Distributor and also an application has been filed with Securities and Exchange Board of India for the registration of Company as a Portfolio Manager. SISL got registered with SEBI as Stock Broker (Member of BSE) in the year 2000 and started the Stock Brokering operations. Later during the year 2007-08 it got registered as a trading and clearing member of Bombay Stock Exchange (BSE). Post the merger of the company it got registered with SEBI as Stock Broker, Trading and Clearing Member of National Stock Exchange of India (NSE) in the year 2012. With the introduction of the Future and option segment into the Indian capital market the company became Member under future & Option (F&O) Segment also. Currently, The Company is providing broking services in Equity, Currency derivative and Future & Options segment of National Stock Exchange of India Limited and BSE Limited

To part finance its working capital, sales and marketing plans, branch/distribution centre expansions and general corpus fund needs, SISL is coming out with a maiden IPO of 6432000 equity share of Rs. 10 each at a fixed price of Rs. 41 per share to mobilize Rs. 26.37 crore. Issue comprises fresh equity issue of 5932000 shares and offer for sale of 500000 shares. Issue opens for subscription on 21.09.17 and will close on 26.09.17. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Hem Securities Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Issue constitutes 26.33% of fully diluted post issue paid up equity capital of the company. From incorporation till June 2010 it issued equities at par. Thereafter, it raised further equity at a fixed price of Rs. 33 per share in January and September 2015. It has also issued bonus shares in the ratio of 3 for 1 in July 2017. Post issue its current paid up equity capital of Rs. 18.49 crore will stand enhanced to Rs. 24.42 crore.

On performance front, SISL has (on a consolidated basis) posted total income/net profits of Rs. 73.99 cr. / Rs. 6.28 cr. (FY16) and Rs. 110.09 cr. / Rs. 8.03 cr. (FY17). Thus it has shown growth in top and bottom lines. For last two fiscals it has posted an average EPS of Rs. 4.04 on an equity base of Rs. 4.62 crore. It has reported average RoNW of 24.33% for past two years. Issue is priced at a P/BV of 2.27. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of 12.

I went through the DHRP and had couple of observations on the company.

  1. Most of the income derived by company is fron trading of stocks. Last year it was around 98 Crores out of ~110 crores. Although they have not made any loss in trading in last five years but this looks to me a very high risk item.
    Can somebody throw some light on trading activity of such companies.
  2. The salary income to promoters and their relatives suddenly increased to ~3.5 crores from ~20 Lakhs in financial year 2017.

(Birsha Haldar) #3

The annual results are showing consistent growth. They have added a subsidiary NBFC to the company and looks like they want to increase their product offering. One major risk is a major part of their revenue is from share trading activities which is high risk business. They have recently added a subsidiary called windpipe finvest ( having NBFC licensce ) so that should be interesting to see what they do with it.
another issues is they seem to be regularly buing shaes of another listed company Anisha Impex. Not sure what is the rationale.
Disc: Invested since 50 levels.