Here are various Brokerage Recommendations for the IPO of L&T Finance,
Unicon Research analysts recommend,
In terms of valuation, the issue is offered at 2.4x and 2.1x its book value at upper and lower price band respectively. Other stocks within the same sector currently trades in the range of 2x-3x. The regulatory risks in the sector and the other macro factors are concerns, but we believe with diversified credit portfolio, better accounting norms L&T Finance can weather these issues better than its peers. Considering promoter’s leadership position in the market, visible brand, better operational parameters & diversified credit portfolio, we expect L&TFH can command higher premium going ahead. SUBSCIRBE
Centrum Analyst, Debanjana Chatterjee Bhadra has the following opinion,
L&T Finance Holdings is considering an issue of 21.1-24.4 crore shares in the price band of Rs.51-59. The book value per share of the company post dilution will work out between Rs.24.9 and Rs.25.4, depending on the allotment price. The P/BV works out to 2.0x and 2.3x FY2011 Book Value (adjusted for equity dilution) for the lower end and upper end of the IPO price band respectively. At valuations of the IPO price band and on the basis of peer comon, the IPO is fairly valued from a short-term perspective. However, considering the strong parentage and good asset quality of the company, we recommend subscribe for long-term investors with minimum time horizon of 6 to 12 months.
Prabhudas Liladhar Analysts Apporva Shah say,
Although the company currently has a relatively smaller book size compared to its peers but the business model is scalable. At the holding company level, the RoE’s are ~15% levels. However, we believe RoE’s could improve further to ~16-18% levels as the company leverages its balance sheet on an enhanced capital base and continues to grow at a pace faster than the industry. Valuations remain reasonable, we recommend ‘Subscribe’.
Aditya Birla Money Analyst Sumit Jatia has the following View,
The current equity raising initiative by the company to augment its capital base will provide enough room to increase its leverage which will drive the growth in loan book going forward. Consequently the return ratios will get a further boost once the benefit of leveraging comes into play. Added to this, the company has untapped Tier 2 capital currently (L&T infra – Nil, L&T Finance - `750.0 mn) which will further support the capital requirement going forward. Given the pedigree and trust, it is an excellent long term bet; however listing gains would largely be a function of market conditions and going by the current market parity, we believe the short term gains would be at best marginal. Therefore recommend long term investors to subscribe to this issue.
KIFS RESEARCH has the following recommendations
In terms of valuation, the issue is offered at 2.23x and 1.93x its book value at upper and lower price band respectively. Other stocks within the same sector currently trades in the range of 2x-3x. we believes that the diversified credit portfolio, better accounting norms, promoter’s leadership position in the market, visible brand, scalable business model, and better operational parameters makes the L&T finance as a better investment opportunity compare to its peers. We recommend SUBSCRIBE to this issue.
SPA Sec Analyst Rachana Kothari Doshi says,
The issue is priced at 2.3x FY2011 BV (BV based on post issue equity) which is at a marginal premium to players like IDFC, PFC etc though the business model is not strictly comparable due to L&TFH being a much more diversified play. At CMP, the issue looks fairly priced. However, L&TFH holds significant value for a long term investor based on its sound financials as well as promising growth. We recommend SUBSCRIBE.
