'Avoid' Futures Ventures India IPO: KR Choksey

MUMBAI: KR Choksey has advised investors to ‘Avoid’ initial public offering of Futures Ventures. The company, a non-deposit taking NBFC, invests in and operate innovative and emerging businesses in growing consumption driven sectors in India. The company has five subsidiaries engaged in the business of retail distribution in rural & semi urban areas, FMCG, clothing and fashion.

It has entered the primary market to raise Rs 750-825 crores by issuing shares of face value Rs 10 each in the price-band of Rs 10-11 per share.

“We believe the business model of the company is quite robust in the long term however there is no clear visibility on how the large part of proceeds will be deployed; they are likely to be invested in lower interest paying instruments.

Since there are no strict comparables in this segment so peer comparison cannot be done. However, we believe the issue is attractively priced at 1.1 times 9MFY11 post issue book, at the upper band. Notwithstanding robust unique business model and compelling India’s consumption driven growth story, we recommend AVOID the issue due to the lack of clear visibility on earnings in near to mid term,” the report said.

The object of the issue is to create, build, invest in or acquire, and operate existing and new business ventures. It also plans to deploy the proceeds for brand building exercises, business promotional & development activities.