Money Tree

The ICRA IPO is scheduled to open on 20th March 2007. Brief details are provided hereunder.

Issue Opens On : March 20,2007
Issue Closes On : March 23, 2007
Issue Size : 25,81,100 Equity Shares
Issue Type : Book Building
Face Value : Rs. 10/-
Price Range : Rs.275/- to Rs.330/-
Tick Size : Re.1/-
Market Lot : 20
Minimum Order Qty : 20
Listing Stock Exchange : NSE, BSE
Maximum Subscription Amount for Retail Investor : Rs.100000/-

Objects of the Issue :

To achieve the benefits of listing on the Stock Exchanges and to carry out the sale of up to 2,581,100 Equity Shares by the company’s selling Shareholders.

Basis for Issue Price :

Face Value : Rs.10/-
Issue Price : Rs. 275 to Rs. 330
EPS for the year ended 31st March 2006 : Rs.12.63
PE ratio for the Higher Price Band : 26.12
PE ratio for the Lower Price Band : 21.8

Industry PE ratio : 43.8
CRISIL PE ratio : 43.8
CRISIL EPS : Rs.31.7

The Company is one amongst the four credit rating agencies in India.
The Company focusses on product and service innovation, and has introduced innovative products in the market.
The promoter of the company is Moody’s India, which is the part of Moody’s group.
The company is expanding global capabilities for consulting and outsourcing services.
The company is recognised amongst investors, issuers and intermediaries.
Some entry barriers are there for rating business. It is not very easy for the new players to enter into this kind of business.

History :

ICRA was incorporated on January 16, 1991 under the Companies Act as “Investment Information and Credit Rating Agency of India Limited”
The name of the Company was changed to ICRA Limited on 3rd February 1995.

Financial Information :

Total income of the Company for the year ended 31st March, 2006 : Rs.351.99 millions
Total income of the Company for the period ended 31st December 2006 : Rs. 319.17 millions

Net profit (after tax) for the year ended 31st March, 2006 : Rs.12,62,60,000/-
Net profit (After Tax) for the period ended 31st Dec, 2006 : Rs.11,74,40,000/-

Comments :

It’s in a niche market. There are only 4 major players CRISIL, ICRA, CARE and Fitch India in the credit rating sector. The company has a backing of Moody’s Group and is placed in a good sector with high entry barriers. Although it faces competition from the other three companies, still there is strong growth potential in the sector with compulsory credit ratings for all debt instruments.
The only listed company in the peer group is CRISIL which is trading at 43.8 times of its EPS and the current issue is offered in the range of 21.8 times to 26.12 times of last year’s EPS making the offer attractive.
It is a fundamentally sound company with reasonable pricing. We recommend the investors to apply for the issue.