CRISIL assigns IPO grade 2/5 to Microsec Financial
CRISIL has assigned IPO Grade "2/5" to the initial public offer of Microsec Fiancial Services Ltd, indicating the fundamentals of the issue are below average.
By ET Online |
MUMBAI: CRISIL has assigned IPO Grade "2/5" to the initial public offer of Microsec Fiancial Services Ltd, indicating the fundamentals of the issue are below average.
Microsec aims to raise around Rs 160 crore from public issue of 8 million equity shares.
The grading reflects Microsec's strength in the retail equity broking and investment banking business in eastern India region. The company's existing network of HNI clients in its broking business serves as a ready client base for its LAS business. In investment banking business the company is active in small ticket deals originating in eastern India region. The competitive advantage of the company lies in its access to its clients for deals originating in the eastern India region.
CRISIL���s grading is tempered by the inadequacy of the present risk management systems, which need to evolve considering the increased focus on LAS business.
Going forward, Microsec will have to increasingly delink the management of broking and risk management functions, which otherwise might lead to conflict between business and risk management needs for the company.
The company currently has a majority of its revenues coming from its own branches and its ability to successfully manage a large franchisee model remains to be seen. Microsec is a small player in the overall investment banking industry, which limits its ability to offer services in large ticket and cross-border deals. Ability to attract talent at competitive rates without a big name will be a challenge for the company's investment banking business. Further, there is inherent volatility in all key businesses of the company due to linkages with the equity markets.
The undifferentiated nature of broking business and the downward trend in brokerage charges due to competition limits the growth opportunities in the equity broking business. The ability to differentiate through client servicing would dictate the growth prospects for the company. Further, the management needs to improve its understanding of risk management systems and be more proactive in implementing them as the LAS portfolio is expected to increase significantly in size post-IPO.
Microsec is headquartered in Kolkata and operates from around 196 business-locations in 49 Indian cities. Of the total 196 branches the company owns around 17 and the rest are franchisee-based. The company derives a major portion of its revenues from the eastern India region.
Microsec aims to raise around Rs 160 crore from public issue of 8 million equity shares.
The grading reflects Microsec's strength in the retail equity broking and investment banking business in eastern India region. The company's existing network of HNI clients in its broking business serves as a ready client base for its LAS business. In investment banking business the company is active in small ticket deals originating in eastern India region. The competitive advantage of the company lies in its access to its clients for deals originating in the eastern India region.
CRISIL���s grading is tempered by the inadequacy of the present risk management systems, which need to evolve considering the increased focus on LAS business.
Going forward, Microsec will have to increasingly delink the management of broking and risk management functions, which otherwise might lead to conflict between business and risk management needs for the company.
The company currently has a majority of its revenues coming from its own branches and its ability to successfully manage a large franchisee model remains to be seen. Microsec is a small player in the overall investment banking industry, which limits its ability to offer services in large ticket and cross-border deals. Ability to attract talent at competitive rates without a big name will be a challenge for the company's investment banking business. Further, there is inherent volatility in all key businesses of the company due to linkages with the equity markets.
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The undifferentiated nature of broking business and the downward trend in brokerage charges due to competition limits the growth opportunities in the equity broking business. The ability to differentiate through client servicing would dictate the growth prospects for the company. Further, the management needs to improve its understanding of risk management systems and be more proactive in implementing them as the LAS portfolio is expected to increase significantly in size post-IPO.
Microsec is headquartered in Kolkata and operates from around 196 business-locations in 49 Indian cities. Of the total 196 branches the company owns around 17 and the rest are franchisee-based. The company derives a major portion of its revenues from the eastern India region.
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