Abans Holdings IPO: Should you subscribe to the issue? Here's what brokerages say

Abans Holdings Ltd's IPO opened for subscription on Monday, 12 December, and will close on Thursday, 15 December. 

The company has set the price band at ₹256 to 270 per equity share. The IPO offer consists of a fresh issue of up to 38 lakh equity shares and offer-for-sale by promoter Abhishek Bansal of up to 90 lakh equity shares.

Along with other basic business needs, the proceeds from the issue will be utilised to increase the NBFC subsidiary's (Abans Finance) capital base.

Company overview

Incorporated in 2009, Abans Holdings Limited is engaged in financial services, gold refining, jewellery, commodities trading, agricultural trading and warehousing, software development and real estate. The company represents the financial services arm of the Abans Group.

The company operates a diversified global financial services business, providing Non-Banking Financial Company (NBFC) services, global institutional trading in equities, commodities and foreign exchange, private client stockbroking, depositary services, asset management services, investment advisory services, and wealth management services to corporates, institutional and high net worth individual clients.

ALSO READ: ALL YOU NEED TO KNOW ABOUT ABANS HOLDINGS IPO

What do brokerages say?

Brokerage house Marwadi Financial Services has assigned the IPO 'Subscribe (With Caution)' rating as the financial service arm of the Abans group, is a global exposure providing innovative financial products company.

However, because the majority of its NBFC advances are unsecured and unbacked by any security, the brokerage is wary over the long term.

"Considering the FY-22 adjusted EPS of 12.36 rupees on a post issue basis, the company is going to list at a P/E of 21.85x with a market capitalisation of 13,539 million rupees, whereas its peers namely Geojit Financial Services Ltd and Choice International Ltd are trading at P/E of 9.62x and 59.0x," said the brokerage in its report.

According to Reliance Securities Ltd, the brokerage industry is highly competitive, with the top key players controlling the majority of the market share, whereas Abans is a largely unheard-of brand.

The brokerage added that the company's goal is on developing long-lasting connections with its trading rivals as well as HNI and institutional clients and serving them.

"The expansion into warehousing business, strong sector potential is key positive, while valuation seems pricey based on current financial position," said the brokerage.

Mumbai-based Research Analyst, Dilip Davda believes the issue to be aggressively priced, based on the recent financial performance.

Further, he raises concern about the IPO's allocation that of just 10% to QIBs, 30% to HNIs, and 60% to ordinary investors. He said that risk-seekers with sufficient cash on hand may want to think about parking funds.

According to Chola Securities Ltd, Abans does not have any listed peers with similar verticals as it’s a diversified business. On the back of aggressive valuation, the brokerage has recommended to 'Avoid' the IPO issue.