Muthoot Finance IPO pricing has been set at Rs. 160 to Rs. 175. There is no discount for retail investors.
The IPO is open from 18th April to 21st April.
Is the pricing of the Muthoot Finance IPO reasonable?
Muthoot Finance has been on a scorching growth path in the recent past (see Muthoot Finance IPO: Gold(en) Opportunity!)
To determine whether the Muthoot Finance IPO price is reasonable one has to consider the valuations of Muthoot Finance‘s closest competitor, namely, Manappuram General Finance & Leasing Ltd
| Details of Muthoot Finance IPO issue | ||
| Face Value | Rs. 10 | |
| Opening Date | April 18, 2011 | |
| Closing Date | April 21, 2011 | |
| Price Band | Rs. 160 . Rs. 175 | |
| Issue Type | 100% Book Building Issue | |
| Issue Size as % of total Cap. | 13.85% | |
| IPO Grade (CRISIL & ICRA) | 4/5 (above average) | |
| Bid Lot | 40 | |
| Listing on | BSE & NSE | |
Muthoot Finance IPO is, at Rs. 175, valued at a P/E of 23 if the EPS for FY 2010 is considered and a P/BV of 9 times if the NAV as of 31.3.2010 is considered. If the figures as on 30th November 2010 are considered, Muthoot Finance‘s Price to Book Value drops to a more reasonable 5 times.
In contrast, Manappuram is quoting at a Price to Book of about 3 times the December 2010 Book Value.
| Muthoot Finance IPO Financial Figures | |||||
| Particu-lars (Rs.Mn.) | 8 months ended Nov30, 2010 | Year ended Mar31, 2010 | Year ended Mar31, 2009 | Year ended Mar31, 2008 | |
| Net Income | 13,016.6 | 10,893.8 | 6,204.0 | 3,686.4 | |
| PBT | 4,411.2 | 3,455.5 | 1,841.7 | 969.8 | |
| PAT | 2,914.8 | 2,275.8 | 977.2 | 636.0 | |
| EPS (Rs.)* | 9.30 | 7.59 | 3.49 | 2.57 | |
| RONW* | 38.64% | 39.12% | 27.08% | 29.59% | |
| NPAs | 0.35% | 0.46% | 0.48% | 0.42% | |
| Muthoot Finance IPO Investment Details | |
| No. of shares at cut-off | 1,120 |
| Max. Amount to be paid (Rs.) | 1,96,000 |
| Cheque favouring | “Escrow Account – MFL Public Issue – R” |
The premium is obviously owing to the superior return that Muthoot Finance has been able to garner.
Muthoot Finance‘s P/E on the basis of the November 2010 figures is 18.82. In contrast, Manappuram, on the basis of the December 2010 results, is quoting at a P/E of 26.19.
So, one can’t say that the pricing of the Muthoot Finance IPO is not reasonable.
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