L&T finance holdings Initial Public Offer:

L&T finance holdings is going public through prospectus . It has announced its IPO which is starting from July 27th and ends on July 29th the price band width being from Rs 51 to Rs 59. The total issue size is Rs 1245 crores.

L&T Finance Holdings, a wholly-owned subsidiary of heavy engineering major Larsen & Toubro (L&T), has raised Rs 330 crore in an institutional share placement ahead of its planned initial public offering(IPO). The company had placed 60 million shares with US-based private equity fund Capital International at Rs 55 a share.

  • Issue proceeds are propounded to be used for Augmentation of the capital base of L&T Finance and L&T Infra to meet the capital requirements arising out of forecasted growth in their assets, primarily the loan portfolio.
  • JM Financial Consultants Private Limited, Citigroup Global Markets India Private Limited and HSBC Securities and Capital Markets (India) Private Limited are joint global co-ordinators as well as book running lead managers to the issue.
  • Barclays Securities (India) Private Limited and Credit Suisse Securities (India) Private Limited too are book running lead managers.
  • Equirus Capital Private Limited is the co-book running lead manager.

Experts are advising to subscribe this IPO for the following reasons:

  • As traders and markets have been favourable to NBFCs lately with L&T’s unmatched brand and parentage, the company looks promising given its historic growth and the urge which the additional capital inflow will provide to the business in the coming quarters.
  • The company has a strong balance sheet and a well established infrastructure finance business.
  • The company's financial product distribution business is also growing at a rapid pace. The strong promoter background also helps in raising funds at competitive rates.
  • The issue price is priced at a premium to other listed peers

Everything has a darker side. we cannot eliminate few limitations of this IPO. those are :

  • The regulatory risks in the sector and the other macro factors are concerns, but with diversified credit portfolio, better accounting norms L&T Finance can weather these issues better than its peers. Considering promoter’s leadership position in the market, visible brand, better operational parameters & diversified credit portfolio, L&TFH can command higher premium going ahead.
  • Recent pre ipo placement was done at 55.Price band (51-59) is huge which is not expected from a company like L&T.

Experts as well as broking firms advise subscribing the issue, citing company's good growth in previous years and L&T's brand name behind it.