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Wednesday, August 10, 2011

Inventure Growth & Securities Ltd:-Buy/sell/,growth prospects and recommendation,news and results,target price/analysis,view and outlook,multibagger

Scripscan:Inventure Growth & Securities Ltd
Cmp:230
code:533506

Story:Inventure Growth and Securities (IGSL) is a financial intermediary company promoted by Nagji K. Rita. The company offers a host of services like trading services in equity cash and derivatives market, debt market, commodities and currency futures segment, financing, wealth management, and distributions of financial products. The company has a diversified clientele base that includes institutional clients, high net worth individuals and retail investors.
IGSL has four subsidiaries:-
1)Inventure Wealth Management: Net sales were Rs 35.07 lakh and loss Rs 10.08 lakh end of March 2011.
2)Inventure Finance: Net sales were Rs 6.26 crore and PAT of Rs 0.19 crore end of March 2011.
3)Inventure Commodities: Net sales were Rs 1.90 crore and PAT of Rs 0.66 crore end of March 2011.
4)Inventure Insurance Broking (step-down subsidiary of IGSL and a subsidiary of Inventure Wealth management.): Net sales were Rs 2.88 lakh while PAT was Rs 1.63 lakh end March 2011.
The company operates through 233 business locations including branches, franchisees and sub- brokers located across 29 cities and towns.IGSL serves more than 35,877 clients (including institutional) in equity broking as of June 30, 2011.The company operates in a highly competitive market.The company had negative cash flow from operating activities in FY 2011, FY 2009 and FY 2007.The company's income and profit have been fluctuating and FY 2011 figures are substantially lower than those of FY 2008. Revenues declined 6% CAGR to Rs 31.16 crore in FY 2011 from Rs 38.03 crore in FY 2008 while PAT fell at a CAGR of Rs 28% to Rs 6.21 crore over the same period.OPM of the company fell from 42.1% in FY 2008 to 24% in FY 2011.The broking industry has two major problems: large number of players and lowering of contribution from high margin cash volumes compared with low margin F&O volumes. Lower entry barrier has made the industry highly competitive putting pressure on margins while rising F&O volumes has further deteriorated the margin.The company ended fy11 with EPS of 3rs,thus at present price of 230 the same gets discounted by over 75 times.This is horrendously expensive.The peer composite TTM P/E stands at 12.89.To me the fair value is at 35rs.I repeat "35rs"."A BLIND SELL AT PRESENT LEVELS".

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