Started in 2004, ASK Investment Managers Limited is a Mumbai based leading asset and wealth management company, primarily catering to the HNI and UHNI market in India. CRISIL Research notes that they were one of the first companies to obtain a portfolio management services license in India. According to CRISIL Research, they were the third largest company in both discretionary listed equity portfolio management services and discretionary equity overall portfolio management services according to assets under management as of May 30, 2018. ASK caters to the investment requirements of the HNI and UHNI clients through the following three business segments:- Asset management, which primarily includes the equity investment management and advisory and property investment management and advisory- Wealth advisory and distribution and- Non-banking financial company business, which recently commenced commercial operations in 2018. Within the asset management segment, ASK provides equity investment management and advisory services primarily to HNI and UHNI clients. According to CRISIL Research, equity remains the most preferred asset class for UHNIs, with a 44% share of UHNI's investment allocation for the first half of Financial Year 2018. The equity investment management and advisory business focuses on long-only equity focused strategies. They have also started AIFs focused on listed equity shares, in Financial Year 2018. To market company's products to clients, they utilize a distribution network consisting of both in-house and third party distributors (primarily Indian and multi-national banks and financial services companies). As of March 31, 2018, they had a network of 53 distributors across India. They advise offshore funds mainly based out of Mauritius from India and also manage/advise offshore funds through the subsidiary in Singapore, which is a registered fund management company, which enables them to cater to multiple classes of investors (such as HNI, institutions, family office, pension funds, funds of funds and sovereign wealth funds) across Asia, the Middle East, Africa and Europe. For the property investment management and advisory business, they receive fixed fees at the rate of up to 2% of average AUM and up to 20% performance fee with full catch up above a pre-specified hurdle rate. In addition to the strengths in asset management and wealth management, company received RBI approval in FY2017 for the non-banking financial company, ASKFH. ASKFH commenced commercial operations in FY2018. Through the NBFC business, company aims for greater synergies across the existing business model. As of March 31, 2018, ASK had 200 employees. As per financial performance, ICFL has posted total income/net profits of Rs. 396.91 cr. / Rs. 112.13 cr. (FY14), Rs. 528.06 cr. / Rs. 149.04 cr. (FY15), Rs. 644.05 cr. / Rs. 191.64 cr. (FY16) and Rs. 719.92 cr. / Rs. 210.80 cr. (FY17). For upto Q3 of FY18, it has reported net profit of Rs. 164.08 cr. on total revenue of Rs. 585.95 cr. So company has posted consistent growth over last couple of years. ICFL has posted an average EPS of Rs. 25.53 and average RoNW of 11.62% for last three fiscals. Issue is priced at a P/BV of 2.17 as per NAV of 263.96 on 31.12.17. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 24. As per RHP, industry average P/E ratio is 28.66 and listed peers comparison shown in above table. So issue looks fully priced. On BRLM's front, five merchant bankers associated with this issue and have handled 58 public issues in the past three years. When we take recent 10 IPOs of each BRLM then out of those 6 issues opened below their offer price and 4 opened at par on listing dates. As per financials, company's growth is consistent and very good, RoNW is 11.62% for last three fiscals and issue is priced at P/E of around 24 as per latest earnings. Company is an NBFC with principal lines of business, namely corporate lending, SME lending, vehicle financing and housing financing. Last two business segments (Vehicle Finance & Housing Finance) are started in recent past and it may give further boost to company's growth, but increasing bond yields and FD rates may put pressure on margins. So we give "SUBSCRIBE FOR LONG TERM" rating to this IPO.
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