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SKS Microfinance IPO Review

SKS Microfinance has come out with an IPO of of 1.68 cr equity shares of Rs.10 each, in the price band of Rs. 850 to Rs. 985 per share. The company is basically an NBFC, with a network of 2,029 branches in 19 states, catering to 67.8 lakh women borrowers and is the largest micro finance institution in India.

Details of the issue:
Issue Open: Jul 28, 2010 - Aug 02, 2010.
Issue Size: 16,791,579 Equity Shares of Rs. 10 each.
Issue Price: Rs. 850 - Rs. 985 Per Equity Share.
Market Lot: 7 Shares.
Listing At: BSE and NSE.

Fundamental Updates:
The company has reported an EPS of Rs.27 and has a book value of about Rs.145. At the current offer price the stock would be trading at 30 P/E and 6 times the Book value. Though the topline as well as bottomline of the company has witnessed the CAGR of more than 100% from FY08 to FY10, the offer price is expensive.

There is a lot of hype being created for this issue, mainly due to Infosys - Narayana Murthy and George Soros - Quantum fund being PE investors in the company. But they have been alloted these shares around Rs.300 and the IPO is price is much higher at 850-985.

But still the issue is likely to get good response from the institutional investors and may be well subscribed. Hence investors looking for listing gains (which is always risky)  may apply, since it has got market fancy. But but other than that, the issue is definitely expensive.


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