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Abans Holdings - IPO - Diversified NBFC with Global Presence
Posted On : 2022-12-12 18:35:41( TIMEZONE : IST )
About the Company
Abans Holdings (Abans) represents the financial services arm of the Abans Group, which provides NBFC services, trading in equities, commodities, depositary services, asset management services, investment advisory services, and wealth management services to corporate, institutional and HNIs. Abans group is a globally diversified organization engaged in Financial Services, Agricultural Trading, Software Development and Real Estate. Currently the company is operating across six countries including Hongkong, UK, UAE, China, Mauritius and India. The company continue to expand into complementary businesses related to equities, commodities, and other financial needs. The company is coming out with an IPO comprising Fresh Issue of 38mn shares and OFS of 90mn shares, aggregating to Rs3.5bn. The Fresh Issue Proceeds of this offer is for fund-based capital requirements.
Business Category
The company has grown from being a commodity trading company into a diversified multi-asset and multi-national financial services company having varied financial services businesses which organized as 1) Finance Business: The company is RBI Registered NBFC and finance business is primarily focused on lending to private traders and other small and medium businesses involved in the commodities trading market. 2) Agency Business: The company is SEBI registered Stock and Commodity Exchange Brokers with memberships across all the major stock exchanges in India, including BSE, NSE, MSEI, MCX, NCDEX and ICEX. 3) Capital and Other Business: Capital business of the company includes internal treasury operations which manages its excess capital funds and the company does by investing in their capital in low / medium risk strategies, maintaining positions in physical as well as exchange traded commodities and other instruments.
Warehousing business
Abans continue to expand into complementary businesses to consolidate existing business. Based on its experience of commodities trading, over the exchanges as well as physical trading, Abans ventured into the business of developing and renting warehouses for traders, where they currently have approximately 0.43 lakhs sq. ft. of warehouse space already developed. They are also in the process of developing a treasury payment service for institutional clients by providing a range of services including the basic money transfer across exchange rates to enabling global trade counter-party payments. Its subsidiary Corporate Avenue Services Ltd, incorporated in the United Kingdom, has applied for a payment processing license from the FCA, UK and has already received approval to act as an Authorised Payment Institution.
Financials in Brief
Total lending assets declined to Rs1.5bn in FY22 from Rs3.9bn in FY21 and Rs4.6bn in FY20. Interest income from Finance Business also declined to 26% in FY22 from 38% in FY21 and 36% in FY20. During FY20-FY22 the company revenue and EBITDA has declined by 52% and 3% respectively, while PAT increased by CAGR of 26%. The company witnessed a strong increase in EBITDA margins from 3.3% and 5.7% in FY20 and FY21 respectively, to 13.2% in FY22. During YTDFY23 (till Aug22), the company recorded a Revenue, EBITDA and PAT of Rs2.8bn, Rs288mn and Rs297mn respectively. ROE witnessed a steady increase from 6.6% in FY20 to 8.4% in FY22, while the company's Debt/Equity declined from 0.5x in FY20 to 0.1x in FY22.
Our View
There is huge competition in broking industry with top key companies have majority of market share, while Abans is relatively unknown brand in the market. Based on FY22 earnings, the company is valued at 20.2x P/E, 1.7x P/BV and 1.9x EV/Sales. The focus of the company is on nurturing long-term relationships with their trading counter parts as well as HNI and institutional clients and providing service to them. The expansion into warehousing business, strong sector potential is key positive, while valuation seems pricey based on current financial position.
Link to the report
