Post Issue Analysis – BCB Finance
Vidrum / 13 Mar 2012
In our IPO analysis we had clearly recommended avoiding the offer. This was on the back of weak management creditability, subdued business growth and high valuations at which it is giving the offer.
The object of the issue is to augment the capital base and for fund requirement for increasing its operational activities. It business comprises margin funding, providing loans against shares and trading in securities. We believe that with a volatile market the growth prospects of the business look muted to subdued. Further, it does not have its own office or a logo and the trade mark used by the company is registered in the name of the company. Also, the promoters are involved in a legal proceeding related to certain disputes aggregating to Rs 10.11 crore, which could have further bad impact on the goodwill and operations of the company.
In FY11 the total Income of the company declined by 4.70 per cent to Rs 1.54 crore while the net profit saw a marginal rise of 2 per cent to Rs 22 lakhs on a YoY basis. The net cash flow from theoperations in three out of past five years is also negative which indicates that the growth for the company looks weak.
There were occasions during the trading session when the sell side shares were around 80,000 in number while on the buying side there were only around 12,000 shares. The general assumption would be that the sellers would be retail individuals while the buyers could be the market makers. We understand though that the market maker would provide a two-way quote for 75 per cent of the time in a day for at least three years. However, we feel there was very less opportunity for investors to exit the counter. This is evident from the fact that the total traded quantity was of 2,76,000 shares only, which is 8 per cent of the 35 lakh shares offered. Further, even the minimum lot was of 4,000 shares.
With subdued growth expectation from the broking business and with the scrip currently trading at higher valuations, we recommend our investors to avoid any fresh position and exit the counter if one has been holding it.
| Particulars | BCB Finance |
|---|---|
| Recommendation | Sell |
| Issue Price | Rs 25 |
| Shares Offered (In Crores) | 0.35 |
| Oversubscribed |
|
| Total | 1.09 |
| Market Maker | 1 |
| Non-Institutional | 1.53 |
| Retail Investors | 0.66 |
| Listing Price | Rs 27 |
| CMP | Rs 25.70 |
| BSE Code | 534109 |
| Percentage Gain / (Loss) on Listing | 8 |
| Percentage Gain / (Loss) at CMP | 2.8 |
| Date of Listing | 13-Mar-12 |
| Shareholding Pattern (%) | Pre-Issue | Post-Issue |
|---|---|---|
| Promoter and Promoter Group | 100 | 69.22 |
| Public | 0 | 30.78 |
| Total | 100 | 100 |
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