EDELWEISS CAPITAL LIMITED -IPO Prospects

EDL - Subcribe for Short to Medium term!!!

Issue Period November 15, 2007 to November 20, 2007
Face Value Rs. 5/-
Price Range Rs 725 TO Rs 825
Min Lot 8 Shares
Grade Very Good
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Company Info

Edelweiss Capital, a diversified financial services company, has opened for subscription with its initial public offering (IPO) of 8,386,147 equity shares of Rs 5 each for cash, at a price to be decided through a 100% book building process.

The issue will close close on November 20, 2007. The price band is between Rs 725 and Rs 825 per equity share of face value Rs 5.

Valuation

Investment positives

Scaling up the investment banking business

During FY07, the income from investment banking grew by 2.6x to Rs 697.5 million. Going ahead we believe Edelweiss has lot of room to scale up considering the huge opportunity in the I-Banking space.

Other business segments to scale-up

Other business segments like insurance broking and asset management are too small compared to investment banking and institutional broking businesses. With the management’s focus to grow its asset management and general insurance businesses, fee income will get a boost.

Investment Concerns

High dependence on capital market

About 58% of the company’s income comes from institutional broking and investment banking businesses, followed by 31% from treasury operations. Thus, any downturn faced by the securities market would impact profitability of the company.

Non-capital market business too small for sustenance

Other business segments like insurance broking and asset management are comparatively smaller than institutional broking and investment banking businesses. With any downturn in the capital market, the company’s income streams will be impacted, and asset management and insurance broking won’t be able to support revenue growth.

Valuation–wise, the shares are offered at a competitive price compared to peers. With an established platform in institutional broking, increasing opportunities in investment banking and presence in high growth business segments like insurance and asset management.

Premium on Listing - 80 -100%*