Hero-Fin Corp( HFCL ) is looking to raise ~Rs.1000 Crores by a way of preferential allotment through a private placement at Rs.820 per share to following investors. The company is issuing total 1,31,09,753 Equity shares.
(i) Hero MotoCorp Limited = 53,99,319 Equity Shares
(ii) Hero InvestCorp Private Limited = 1,46,342 Equity Shares
(iii) Bahadur Chand Investments Private Limited = 26,82,927 Equity Shares
(iv) RK Munjal and Sons Trust = 7,90,394 Equity Shares
(v) Pawan Munjal Family Trust = 7,90,394 Equity Shares
(vi) Survam Trust = 2,43,905 Equity Shares
(vii) Otter Limited = 8,24,405 Equity Shares
(viii) Link Investment Trust = 12,544 Equity Shares
(ix) Credit Suisse (Singapore) Limited = 1,70,732 Equity Shares
(x) APIS Growth II (HIBISCUS) PTE. LTD. = 20,48,781 Equity Shares
The valuation report is prepared by CMA Rajendra Kumar Joshi and the date of valuation is 30.11.2019.
HFCL is a Non-Banking Finance Company (“NBFC”) engaged in providing financial services in India. The Company was incorporated in 1991 and is based in New Delhi, India. Hero MotoCorp Limited (“HMCL”) holds 41.18% stake in HFCL.
The Company provides two-wheeler financing and a bouquet of other financial products including used car financing, personal loan, inventory funding, loan against property, loans to Small and Medium Enterprises (“SMEs”) and emerging corporates.
The company has shown tremendous growth in the last 5 years. In 2015-16, the company had revenue of Rs.772 Crores which has reached Rs.2492 Crores in FY18-19. More detail can be accessed at Link
Price to Book multiple is the tool to gauze the valuation of financial companies.
Let us see how Hero-Fin Corp fairs up?
Book Value ( FY18-19 ) = 321 per share. On the basis of the book value and price of Rs.820 per share( as per valuation report ), the P/B stands at 2.55x. We are expecting the P/B of 350 in FY19-20, on that basis, the P/B stands at 2.34x.
The stock currently is available in the unlisted market at Rs. 1025 per share. So on that basis, in the unlisted market, the share is available at P/B multiple of 3.19x, which is fair considering the growth shown by the company.