Thursday, September 13, 2018

IL&FS group collapse : FirstChoice IPO saw it coming in 2010

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Recently rating agency ICRA has downgraded the debt-laden Infrastructure Leasing and Financial Services (IL&FS) by at least nine notches citing cash crunch pressure. 

The rating company has downgraded the company’s bonds and long term loans to BB from AA+.

IL&FS Transportation Network came IPO in 2010 and this is what FirstChoice IPO wrote while analysing the issue.


- Promoters - IL&FS, has been involved in SEBI proceedings in the past and has been subjected to certain penalties by SEBI.

- IL&FS’s business is significantly dependent on policies of the Government of India.

- Funds are raised, mainly for pre payment/repayment of laons (Rs 500cr).

- The growth of the business mainly depends on winning new contracts.

- Company operates in an industry that is capital intensive in nature, which requires capital infusion periodically to sustain growth.

- Operates in a regulated environment, the toll road operations are regulated by the NHAI.


The issue,in the price band of Rs 242-258, is very aggressively priced. Refrain from subscription.

Now :

As against the IPO price of Rs 258, the stock is now trading around Rs 25, down 90%. 

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