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Monday, August 15, 2011

L&T Finance Holdings lists 4% below IPO - Should you buy now?

L&T Finance Holdings IPO listed in stock exchanges debuted to close the first day trading at Rs 49.95. That's a loss of nearly 4% as compared to issue price of Rs 52.

I had mentioned in my post L&T Finance Holdings IPO Analysis that the listing gains for this IPO may not be very good and high.

If we look at the analysis from stock broking firm ICICI Direct,"At current stock price of Rs.50, the stock trades at 1.5x FY13E Book Value. L&T Finance Holdings have investments in subsidiaries to the total of Rs 1.5 per share. Better margins and strong return ratios would allow the stock to trade at 1.8x FY13E BV arriving which is around Rs.56.

It has also sold a 4% stake to Capital International Group at Rs.55 per share. In other words, the stock below Rs.50 is certainly available at good valuations and one may buy stocks of L&T FH below Rs.50 for long term investment portfolio.

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