Abans Holdings IPO Fundamental Analysis (Avoid)

Abans Holdings Limited IPO Review

Abans group is globally diversified organisation engaged in Financial Services, Gold Refining, Jewellery, Commodities Trading, Agricultural Trading and Warehousing, Software Development and Real Estate.

Abans Holdings is the financial services arm of Abans Group. It is engaged in providing NBFC services, global institutional trading in equities, commodities and foreign exchange, private client stock broking, depositary services, asset management services, investment advisory services and wealth management services to corporates, institutional and high net worth clients.

Finance Business: Finance business through RBI registered NBFC is primarily focused on lending to private traders and other small and medium businesses involved in the commodities trading market. NBFC business provides secured and unsecured structured term financing solutions to private traders and other small and medium businesses in the category of small and medium enterprise borrowers in India by way of structured financing and trade. However, based on the client requirement and internal risk-assessment, it also provides unsecured loans.
Agency Business: The Issuer is a SEBI registered Stock and Commodity Exchange Brokers with memberships across all the major stock exchanges in India. Being FCA registered financial services firm in London, have direct/indirect memberships in various international exchanges. It is also a SEBI Registered Portfolio Management company as well as a SEBI Registered Category-I FPI. It offers various institutional and non-institutional trading services, wealth management and private client brokerage services, mainly in equity, commodities and foreign exchange.
Capital and other Business: Capital Business includes internal treasury operations which manage excess capital funds. It structures treasury investments to maintain sufficient liquidity in the portfolio to support the capital needs of other businesses. Further it also provides Warehousing Services to commodity market participants.

The Issuer intends to increase its exposure to segments like margin funding, loan against shares, IPO Financing and other structured financing opportunities available in the capital market space.

Financial Review

The topline of the Issuer is showing a declining trend. Abans Holding posted total revenues of Rs 288.31 crore for 5MFY23 and PAT of Rs 29.75 crore for the same period. For FY22, income from operations decreased by 51.46% to Rs 638.63 crore from Rs 1325.51 crore in FY21. However, PAT increased to Rs 61.97 crore during FY22 from Rs 45.80 crore in FY21 because of decrease in expenses. Profitability margins have increased in FY22 (9.70%) and for 5MFY23 (10.44%) as compared to the last two fiscals due to reduction in expenses.

Return on net worth has been 4.39% (5MFY23), 9.82% (FY22) respectively and Debt to Equity is 0.14x of equity as at the end of FY22.

Table 1 - Financials and Ratios (Amount in Rs Crore)
Financials and Ratios				Amount in INR Crores
	Aug 31 2022	FY22	FY 21	FY 20
Total revenue	288.31	646.23	1331.37	2771.9
Revenue from operations	284.9	638.63	1325.51	2765.2
PAT	29.75	61.97	45.80	39.22
EBITDA	32.17	92.48	81.53	96.90
Total Assets	1230.72	1168.69	1181.51	1213
Net Cash from operating activities	28.69	-11.51	62.23	18.12
EBITDA Margin	11.29%	14.48%	6.15%	3.50%
Net Margin	10.44%	9.70%	3.46%	1.42%

Valuation and Peer Comparison

The IPO is priced at 17.52x with annualized EPS of 15.41 for 5MFY23 calculated at the upper price band of Rs 270. P/E is 20.19x when calculated with EPS of 13.37 for FY22. Peer average P/E is 31.40 as per RHP. Edelweiss Financial Services, Geojit and Choice International are the peers of the group with respective P/E of 27.44x, 7.28x and 19.44x.

Table 2 - Listed Peer Comparison
Listed Peer Comparison
Particulars	Edelweiss Fin Services	Geojit	Choice International	Abans
Face Value per share	1	1	10	2
Revenue from operations (FY22 INR Crores)	6911.4	480.79	286.0	284.9
PAT margin	3.07%	29.74%	18.75%	10.44%
EPS	2.11	6.31	13.84	13.37
NAV per share	73.13	29.2	105.86	136.17
Return on net worth	2.89%	21.61%	13.07%	9.01%
P/E	27.44	7.28	19.44	NA
D/E ratio	2.79	0.06	0.52	0.12
CMP (9th Dec 2022)	67.6	47	255.55	NA

Issue Details

Abans Holdings Limited IPO opens on 12th Dec- 15th Dec 2022 with a price band of 256-270 per share. Retail quota is 60% and investors can apply with minimum bid of 55 shares (Rs 14,850). Maximum lot size is 715 shares (Rs 1,93,050).The issue is an offer for sale of 90,00,000 equity shares by promoter Mr. Abhishek Bansal. The Promoter Group currently holds 97.42% of shareholding of the Company and will hold 72.09% post issue. The Issue is expected to list on 23rd Dec 2022.

Conclusion and Investment Strategy

The Issuer offers an integrated financial services platform which includes financing, institutional trading, private client brokerage, asset management and investment advisory services. The financial profile of Abans Holding appears to be weak with a declining trend in its topline. The sector also faces a pressure on its margins.

Reviewer recommends Avoid to the issue.

Review By CA Priyanka Choudhary on 5th Dec 2022

Review Author

About CA Priyanka Choudhary

CA Priyanka Choudhary, a freelance chartered accountant

Priyanka Choudhary Jain is a Chartered Accountant and an experienced credit analyst. She has worked with CRISIL as Senior Credit Analyst on ratings assignments including business and financial analysis in Corporates as well as the Public Finance Sector.

Email: [email protected]

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.