Initial public offer (IPO) of Credit Analysis & Research (CARE) will open for subscription on December 7. The rating agency plans to raise Rs 5.04-5.40 billion by issuing 7.2 million shares of the face value of Rs 10 each through the issue. It has fixed the price band for its initial public offer (IPO) of shares at Rs 700-750 a share. The issue will close on December 11. Promoters will dilute 25.22% of their holding in the company through the stake sale.
Commenting on the CARE IPO, Sykes & Ray Equities (SRE), said, "On the financial front, while its top line has registered a CAGR of 48.4% per cent between FY07-12, the bottom line has reported a CAGR of 57.8% for the same period. CARE has been able to maintain its high PAT margin of 53% with strong ROE of 34%.
Based on the price band of Rs 700-750 & FY12 annual EPS of Rs. 40.52, CARE will be trading at P/E range of 17.27x to 18.5x respectively. The IPO range is observed to be at a significant discount to its local peers on BSE and NSE despite having strong growth prospects. So we recommend SUBSCRIBE."