SMC Global: Good Deal To Broker?

Next in our series in the IPO/FPO company introductions is SMC Global Securities Ltd (SMC). This company has plans to tap the primary market with a public offer of 1.59 crore equity shares of face value of Rs 2 per share. The offering consists of a fresh issue of 79.34 lakh equity shares by the company and an offer for sale of 79.34 lakh equity shares by Millennium India Acquisition Company Inc. The total equity shares on issue will aggregate to 13.11% of the post issue paid-up capital of the company.

SMC is a well diversified financial services company offering brokerage services (across asset classes including equities (cash and derivatives), commodities and currencies), investment banking, wealth management services, distribution of third party financial products, research, financing, depository services, insurance broking and clearing services. It caters its broking clients through a network of 43 branches and 2521 registered sub-brokers and authorized persons spread over more than 500 cities and towns. SMC has also established an office in Dubai for brokerage and trading activities. Established in 1994, it went public through an initial public offering in 1995, and is currently listed on the Delhi Stock Exchange, Ludhiana Stock Exchange, Calcutta Stock Exchange, Ahmedabad Stock Exchange and the Guwahati Stock Exchange.

For FY2012, SMC's overall market share, as a clearing and trading member, in the cash segment of equities was approximately 2.69% and 1.39% of the total turnover of NSE and BSE respectively. Its market share in the equity derivatives segment was approximately 5.68% and 21.67% of the total turnover of NSE and BSE respectively. Further, in the commodity segment it had a market share of approximately 8.28% and 17.80% of the total turnover on the MCX and the NCDEX respectively. In the currency segment it stood at approximately 2.56% and 1.80% of the total turnover on the MCX-SX and the NSE (currency) respectively.

SMC and Millennium India Acquisition Company Inc., which currently holds 158.67 lakh equity shares of SMC, has reserved 6.34 lakh equity shares to be allotted to eligible employee and 6.34 lakh equity shares for existing retail shareholders. Further, the company plans to utilise the funds raised through the IPO for the purpose of margin maintenance with stock exchanges (Rs 30 crore), part repayment of its term loan (Rs 10 crore) and investment into its subsidiary – SMC Comtrade (Rs 10 crore).

Watch this space for more details on whether and why you should buy into this stock when it comes up with details of pricing very soon.