PTC India Financial Services IPO is opening today. As per RHP, Capital History is shown in following table.
| Date | No. of Shares | Price | Particulars |
| 30/11/2006 | 3,000,006.00 | 10 | PTC - Promoter |
| 30/11/2006 | 1,000,000.00 | 10 | PTC - Promoter |
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| 25/5/2007 | 50,000,000.00 | 10 | PTC - Promoter |
| 31/1/2008 | 18,000,002.00 | 16 | GS Strategic Investments |
| 31/1/2008 | 18,000,002.00 | 16 | Macquaire India Holdings |
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| 10/4/2008 | 91,999,994.00 | 10 | PTC - Promoter |
| 10/4/2008 | 15,666,665.00 | 16 | GS Strategic Investments |
| 10/4/2008 | 15,666,665.00 | 16 | Macquaire India Holdings |
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| 30/3/2009 | 10,000,000.00 | 10 | PTC |
| 30/3/2009 | 181,250,001.00 | 16 | PTC |
Preferential allottment is being made to GS Strategic and Macquaire at Rs. 16/- in January & April 2008. Price of Rs. 16/- is at 60% premium than what promoter is ready to pay because Power Trading Corporation which is being promoter company allotted shares @ Rs. 10/- only in April 2008.
One natural natural question comes to mind how any investor can be convinced for making investment at such higher price than what promoter is being offering. It is possible when purblic issue timings were decided in advance at the time of preferential allottment. Now Macquaire is going to dilute its stake by selling 2.92 Crore shares resulting into average buying cost of Rs.11.27 if issue subscribes at Rs. 28. Now premium of 12.7% is justifiable to the price at which shares are being offered to promoter in 2008.
If we compare average buying cost year ended 31/3/2009, then, Investor got the shares at 14.75% discount i.e. at Rs. 11.27/- while average buying cost to Promoter is Rs. 13.22/-.
Why company not opted for IPO route in 2008 itself??? It may be because market was not willing to give such huge valuation which is being offered now and company was in need of fund.
Post listing, it will be clear whether market is ready to give valuation what company is asking. But even if company does not get those valuation and shares got lists at 25% discount, who cares????? Nine months ended Dec. 2010 EPS is of Rs. 0.72 and we assume EPS of Rs. 1 for year ended March 2011 then company is asking for P/E of 28 times at upper band.
Power Finance Corporation EPS for nine month ended Dec. 2010 is Rs. 17.53 and we assume EPS of Rs. 23 for full year Ended March 2011. That results into P/E of just 10 times at the price of Rs. 236 today.
Go for PFC...........Do not subscribe to PTC India Financial Services Ltd.
Happy Investing
