Indo Thai Securities IPO - An Indian IPO Blog Insight

Indo Thai Securities Limited has entered the capital markets with a Public issue of 40,00,000 Equity Shares of Rs.10/- each. The Issue would remain open for subscription between Sep 30, 2011 to Oct 5, 2011

The Price Band for the 100% Book Building Issue is fixed at Rs.70/- to Rs.84/- per equity share with a bid lot of 80 Equity Shares and in multiples thereof. Corporate Strategic Allianz Limited is the Book Running Lead Manager to the Issue with Hem Securities Limited being its Syndicate Member and Sharepro Services (India) Private Limited being the Registrar to the Issue


Company Profile:
Indo Thai Securities is an Indian Stock Broking Company providing trading services in Indian Equity Market (BSE and NSE), Future & Options and Currency Derivatives Segments. The company also provides depository services through Central Depository Services (India) Limited. Other services offered by Indo Thai Securities includes Mutual Fund Service System (MFSS) & Interest Rate Futures (IRF) from NSE. The company is promoted by Mr. Parasmal Doshi and Mr. Dhanpal Doshi




IPO Grading/Rating:
CARE has assigned a “CARE IPO GRADE 2” to the proposed IPO issue of Indo Thai Securities Limited (ITSL) “CARE IPO GRADE 2” indicates "Below Average Fundamentals", CARE  assigns IPO Grade on a scale of Grade 5 to 1, with grade 5 indicating strong fundamentals and Grade 1 indicating poor fundamentals. Care’s IPO Grading is an opinion on the fundamentals of the issuer. The grade assigned to
any individual issue represents a relative assessment of the fundamentals of the issuer


The grading of Indo Thai Securities Limited (ITSL) is constrained due to the small scale of operating in a highly competitive broking industry marked by the low market share and limited revenue diversification. The geographical concentration with the limited branches network and high dependency on the capital market which are inherent volatile leading to uncertainties in ITSL’S earning profile, further constrain in grading. The grading however takes into account the experience of the promoters with the track record of more than two decades and comfortable financial risk profile commensurate with the present scale of operation

Special Concerns:

• The company is involved in a number of legal proceedings amounting to Rs. 4145.06 Lacs against its promoter/directors and company and amount of Rs. 428.80 Lacs against the Group Companies, which, if determined against the company, could adversely affect its business and financial condition
• The company is not the owner of its Registered Office. The same has been taken on lease from a certain Paras Doshi (H.U.F.) for a period of 6 years commencing on May 01, 2008 till April 30, 2014. 
• The company has not complied with AS15 – Accounting for retirement benefit in the financial
  statements

Analysis of Financials: 
The Statement of Assets and Liabilities and Income and Expenses of the Company as per the RHP are as under:

At an EPS of Rs.1.77, the company comes at a PE multiple of 47.45 times on the upper end of the price band and about 39.55 times on the lower end of the price band, which clearly makes Indo Thai Securities a highly expensive bet. Similar companies with wider geographical coverage and larger scale of operations are trading much cheaper in the listed area. The fundamentals of the company simply cannot justify the price band at which the IPO is made