Here are Various Brokerage Recommendations on the IPO of Future Ventures,
Way2WEalth,
At the offer price bands, the issue is available at P/BV of 1.06-1.16 on fully diluted equity capital. Though the issue price very well justifies the earnings profile of the business ventures, it may be noted that it might take a while for FVIL to benefit fully from an acquisition. An investor looking forward for an exposure to the consumption-led theme can instead invest in Pantaloon Retail India which has proven business model and better operational performance rather than investing in a sort of holding company with focus on such a theme, which currently seems to be a high risk proposition. We thus recommend an AVOID for the issue.
Unicon Wealth,
FVIL’s ability to successfully turnaround operationally & financially the business ventures, mobilize funds for providing the funding support to existing/new business ventures and profitably divest stake in its business ventures would eventually decide the success of FVIL’s unique business model. We believe some business ventures where they have invested have great potential going forward. Ventures like Aadhaar with long gestation period will reap the fruits in future of first mover advantage in rural retail space & be a part of rural consumption growth story. At the upper & lower price band the issue is priced at 1.2x & 1.1x of it’s current book value. Considering the issue at face value, growth of consumerism & branded products one could SUBSCRIBE to the issue.
KR Choksey,
Since there are no strict comparables in this segment so peer comon cannot be done. However, we believe the issue is attractively priced at 1.1 times 9MFY11 post issue book, at the upper band. Notwithstanding robust unique business model and compelling India’s consumption driven growth story, we recommend AVOID the issue due to the lack of clear visibility on earnings in near to mid term.
Ajcon Global,
With due consideration to factors like company’s established presence in most of the business ventures, across the value chain such as Life style, FMCG and Food products segment, robust capital adequacy levels, debt free profile (at standalone level), possibility of potential upsides in terms of divestment gains, we believe it may be a dark horse in the future and recommend investors with a higher risk appetite to ‘SUBSCRIBE’ to the issue.
Sharekhan's Views,
FVIL has a very unique and robust business model. However, the current investments would take time to mature and reflect in its financial performance. Moreover, the lack of investment opportunities to deploy the funds raised in the issue might lead the company to invest the funds in interest bearing instruments in the interim period, generating unfavourable return ratios. At the upper price band of Rs11, the company is priced at 1.1x the p ost-issue book value. There is no strictly comparable listed peer. However, in the financial sector, there are public sector banks that are available at comparable values with clear visibility in earnings growth and much better return on equity.
Aditya Birla Money has the following Views,
However, benefits of the current investments by FVIL will start flowing after a few years only as businesses are young / at nascent stage. The success of the model would depend on a)investments / spending being made into brands giving it wider platform to survive and flourish; b) clearly laid out business principles and pricing wherever there is conflict of interest. Market valuation too would closely track these. The benefits thus clearly remain back ended and therefore recommend investors with only long-term view to subscribe to the issue. We do not expect significant listing gains as this would also attract holding company discount.
