Wealth First Portfolio Managers IPO – Is it worth investing?
Wealth First Portfolio Managers IPO Review
Ahmedabad based, Wealth First Portfolio Managers IPO would open for subscription on 10th March, 2016. Wealth First Portfolio Managers Ltd is a financial services provider for various types of financial products available in Indian market. The company has poor financials which is coming to public subscription. Are there any positive factors in Wealth First Portfolio Managers IPO? What are its hidden factors in Wealth First Portfolio Managers IPO?
About Wealth First Portfolio Managers Limited
The company is a one stop financial services provider for various types of financial products available in Indian market. The company offers various financial instruments according to risk appetite and holding period of client that includes Government Bonds & Securities, Direct Equity, Cash Management Services, Derivative products, Mutual Funds, Insurance products, Commodities, REITS and Market Making Services. The company is one of top 100 AMFI distributors of Mutual funds.
Issue details of Wealth First Portfolio Managers IPO
- IPO opens: 10-March-2016
- IPO closes: 15-March-2016
- Face Value: Rs 10 per share
- Issue price: Rs 50 per share
- Issue size: Rs 840 Lakhs
- Lead Managers: Sarthi Capital Advisors Private Limited
- Listing: NSE Emerge Platform
- Download Wealth First Portfolio Managers IPO Prospectus from SEBI Website at this link
Purpose of the IPO:
1. Augmenting long term Working Capital for Bond market operations
2. Technology Upgrade
3. Expansion of domestic operations for mutual fund distribution business
4. Issue Related Expenditure
5. General Corporate Purpose
Company Financials (reinstated-standalone)
- Company generated revenue of Rs 25,867.76 Lakhs for the year ended Mar-11 and Rs 16,966.08 Lakhs for the year ended Mar-15. For Six months ended Sep-15, it generated revenue of Rs 4,916.1 Lakhs.
- Company posted a profit of Rs 9.6 Lakhs for the year ended Mar-11 and profit of Rs 202.41 Lakhs for the year ended Mar-2015. For Six months ended Sep-15, it generated profits of Rs 67.12 Lakhs.
- Its restated EPS for FY 2015 is Rs 4.3 and last 3 years average EPS of Rs 2.32.
Reasons to invest Wealth First Portfolio Managers IPO
Reasons not to invest in a Wealth First Portfolio Managers IPO
- Its revenues are in declining mode.
- It generates thin margins of 1.2%.
- Company, its Directors, Promoters and its Group entities are involved in certain regulatory proceeding(s). Any adverse decision in such proceeding(s) may render them liable to liabilities/penalties and may adversely affect business and results of operations.
- One of its Group companies license for NBFC had been rejected.
- Some of its Group Entities have incurred losses in the financial year 2013-14.
- Company has a negative cash flow in some of the previous years. Sustained negative cash flow could impact its growth and business.
- Company requires significant amounts of working capital for a continued growth. Company's inability to meet working capital requirement may have an adverse on the results of operations.
- SME IPO’s are trading in low quantity. One may have liquidity issues.
- Other risk factors (Internal and external) can be viewed in prospectus Page no. 16 onwards.
Recommendation / Investment strategy
- On the issue price of Rs 50 and based on FY2015 EPS of Rs 4.3, its P/E Ratio works out to be 11.6. Similarly, based on last 3 years EPS of Rs 2.32, P/E Ratio works out to be 21.5. Means company is asking the issue price of Rs 50 in the P/E ratio of 11.6 to 21.5. Its peers like Dynamic Portfolio Management & Services Ltd P/E ratio is 622.5 (Highest) and VLS Finance is 19.97 (Lowest). Hence, the issue price of Rs 50 is reasonably priced.
- There is nothing exciting in this company IPO. Its revenues are in declining mode. It generates thin margins of around 1%. There is stiff competition in the business it does. Investors should be cautious and should stay away from this IPO.
Disclaimer: I do not have an interest in investing in this IPO. The idea of giving positive and negative factors to investors in this article is to create awareness and education about this IPO. One should NOT constitute this as investment advice to buy or not to buy. Please consult your investment advisor before you invest in such high risk investment options.
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Wealth First Portfolio Managers IPO Review