GCM Commodity and Derivatives To Come Up With IPO
Priyanka Kumari / 05 Jul 2013
The company plans to meet its working capital requirement and gain the MCX membership through the issue proceeds. It has planned an expenditure of Rs 58 lakh for the membership.
We had earlier informed readers about GCM Securities’ recently filed DRHP for listing on the BSE SME platform. Now, its subsidiary company, GCM Commodity and Derivatives (GCMCD) is moving on the lines of its parent company, which has 67.03% holding in GCMCD. GCMCD public issue will open on Aug 1, 2013 and will close on Aug 5, 2013.
GCMCD has proposed to offer 35.10 lakh equity shares at a fixed price of Rs 20 per share, aggregating to Rs 7.04 crore. 1.86 lakh equity shares are reserved for market makers and the remaining will a net issue to the public. The lead manager for the public issue is Inventure Merchant Banker Services.
Previously, the company was engaged in the business of commodity and equity broking. During FY13, it got a membership with NSEL and started investing in its investment products. Since May 2013, GCMCD provides only commodity broking facility to investors. Currently, the company operates from its corporate office at Mumbai.
On the financial front, GCMCD's topline stood at Rs 28.6 lakh in FY13, which is 107% up from Rs 13.8 lakh in FY12. Its bottomline for FY13 is Rs 12.8 lakh. However, the company has reported huge losses in the last few years. In FY12, the company posted a net loss of Rs 54,000.
Through the issue proceeds, the company plans to meet its working capital requirement and gain the MCX membership. To acquire this membership, it has planned an expenditure of Rs 58 lakh and an amount of Rs 6 crore will be employed for its working capital requirement.
The other broking listed firms such as BNK Capital, India Infoline, Motilal Oswal Financial Services and Edelweiss Capital are trading at a PE of 6.36x, 15.99x, 12.44x and 19.17x respectively. GCMCD has quoted an issue price of Rs 20, and its share price will trade at a PE of 47x after listing. The company has reported a very poor performance in its previous years.
Considering a poor financial performance, no brand recognition, a very limited work area in the market and an aggressive pricing, we suggest investors not to subscribe to this issue offered by the company.
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