S Chand IPO

This post on S Chand and Company IPO tries to bring out consolidated brokerage views opinions, IPO Review / Analysis, Note/ reports and recommendation of brokerages , Analyst, Business New papers, Management views, information on Anchor investors, Subscription etc on S Chand and Company IPO and shall be updated continuously till the closure of the issue The information collated from various sources and reports in public domain can  help investors to decide whether they should subscribe to S Chand and Company IPO.
Related Posts:
1) S Chand and Company IPO: Peer Analysis
2) S Chand and Company IPO Review

S Chand and Company IPO : Allotment Status

Check Allotment Here
  

S Chand and Company IPO : Subscription etc.  
Subscription: S Chand and Company  IPO  ( x times)
 QIBNIIRetailTotal
Day 3(approx)44.27204.656.0759.49
Day 2 .2.68.322.241.96
Day 10.6x0.23x0.6x0.52x
Application wise Retail portion is subscribed 5.39x

List of Anchor Investors

S Chand and Company has raised nearly Rs219 crore from 15 anchor investors at Rs 670 per share. The anchor investors including Birla Sunlife midcap Fund, Rliance small cap Fund, HSBC Global Investment Funds – Indian Equity, HDFC Trustee Company Ltd – HDFC Prudence Fund, Nomura Singapore Ltd, BNP Paribas Arbitrage and SBI Life Insurance Company, Nomura Trust picked up a significant chunk of the anchor portion of about 10.52% followed by East Spring Investment India with 9.15%.

Click here for Anchor Investors of S Chand and Company IPO

S Chand and Company IPO :Grey Market Premium etc.
08/05/17 Grey Market Premium Rs. 90
29/4/17 Grey Market Premium Rs. 138
28/4/17 Grey Market Premium Rs. 85-90 
27/4/17 
Grey Market Premium Rs. 80, Kostak (Appl. Form) Rs. 400
26/4/17 Grey Market Premium Rs. 130, Kostak (Appl. Form) Rs. 450 
25/4/17 Grey Market Premium Rs. 180, Kostak (Appl. Form) Rs. 525 
Consolidated Views of Brokerages, Analysts, Business New Paper Reports, Management Views on S Chand and Company  IPO. 
  • Ajcon Global: At the upper end of the price band of Rs. 670, the IPO is valued at 50x at FY16 post issue EPS which appears quite high. However, post merger with Chhaya growth prospects would improve and debt to be repaid post IPO. On accounting earnings growth, debt repayment, S Chand would trade at ~35x P/E which is quite reasonable considering the  Post repayment of debt, Company’s earnings would improve and would be reflected in improving return ratios. We believe that the shortage of Pan India quality leading content and publishing house on domestic bourses would give S Chand and Company an added advantage. Hence, investors can expect listing gains owing to scarcity premium enjoyed by the Company. 
  • Angel Broking: “S.Chand & Company Ltd (SCCL) is a leading text book publisher and operates as an education content provider in India. The company develops and delivers content, solutions, and services in the education K-12, higher education, and early learning segments. It offers 55 consumer brands such as S.Chand, Vikas, Madhuban, Saraswati, Destination Success, etc. and has strong presence in CBSE, ICSE and State Board affiliated schools. SCCL’s K-12 segment contributes ~72.5% to the revenue and the balance is from Higher education and others segments. In terms of valuation, the pre-issue works out to 3.0x of FY2017E P/BV (at the upper end of the issue price band), which is lower compared to its peers (Navneet is trading at 6.3x its FY2017E P/BV). Also, SCCLs EV/sales multiple 3.2x is at a discount to Navneet’s 3.7x. On EV/EBITDA front too, SCCL issue appears to be attractive at 13.4x v/s 16.3x of Navneet. However, the return on invested capital for S.Chand and Navneet both is in the range of 28-30%. Hence, considering the company’s leadership position in K-12 market, strong brand recall and pan India reach along with higher revenue/PAT growth (revenue/PAT grew at a CAGR of 33%/36% over FY2012-16 v/s 11%/7.5% of Navneet), we believe that SCCL is rightly placed for further growth. Thus, we recommend a SUBSCRIBE on the issue. “
  • Prabhudas Lilladher: ““The IPO consists of a fresh issue and OFS from Everstone Capital/promoters, valuing the business at a market cap of Rs 230 crore, implying an EV/Ebidta of 16.4 times FY17E, which seems fully priced. However, considering strong parentage, branded portfolio, professional management, reducing debt profile post IPO, good growth opportunity & limited listed opportunities to play the Publishing segment, recommend ‘subscribe’ with a long term objective.” 
  • GEPL Capital: “S Chand & Company Ltd  stands to gain from operating leverage. At a P/E of 35xs of FY16 EPS. We believe that S Chand and Company demands a discount to its domestic peers. We assign a Subscribe rating to the IPO. “
  • LKP Securities: “We believe that its 7 decade legacy, leadership in K-12 education content market, strong margin & growth prospects have been captured well at the valuations of ₹ 660-670 per share where the scrip would trade at 39XFY16 earnings. We recommend a SUBSCRIBE on the S Chand IPO for listing gains.” 
  • Hem Securities: “At higher end of price band of Rs 660-670 ,co is bringing the issue p/e multiple of around 31. However looking after fundamentals like high growth prospects , strong brand name & leading position of co , we recommend “Subscribe” on issue for long term”
  • Capital Market Magazine: “Score 45/100.  At a higher price band of Rs 670, the diluted equity share capital of the company stands at Rs 17.35 crore of face value of Rs 5 each. EPS for FY 2016 works out to Rs 13.4. The scrip is offered at P/E multiple of around 49.8 times FY 2016 earnings.Chhaya, which was acquired on 6 December 2016, reported consolidated net sales of Rs 128.62 crore and PAT of Rs 30.23 crore for FY 2016. Consolidating 74% of Chhaya’s performance for FY 2016, the back-of-the-envelop calculations indicate FY2016 consolidated PAT (after MI) of S Chand could have been around Rs 69 crore. This translates into EPS of Rs 19.9 for FY 2016. At the offer price of Rs 670, the scrip is offered at P/E multiple of around 33.7 times FY 2016 consolidated earnings.”
  • ICICI Securities: “The standalone multiple on FY16 basis looks expensive at 50x. However, accounting for the Chhaya merger, adjusted P/E appears at 34x FY16. Completion of Chhaya acquisition would further strengthen S Chand’s leadership position in the K-12 segment, which would enable it to post 15% revenue CAGR in the near term. We have a SUBSCRIBE recommendation on the issue on the back of growth prospects.”  
  • SP Tulsyian website: ” At Rs. 670, company’s market cap will be Rs. 2,325 crore and EV Rs. 2,458 crore. Based on estimated FY17 and FY18 EPS of about Rs. 21 and Rs. 26 respectively (including Chhaya), the PE multiples are 31x and 25x respectively. EV/EBITDA multiples are 14x and 12x for FY17 and FY18 respectively, which are quite rich.S Chand’s IPO valuation is superior to Navneet, with the latter trading at PE of 23x and EV/EBITDA of 13x, on FY17 estimates.Very recent issue of CL Educate in March this year also invoked lukewarm response, besides listing at 20% discount and still quoting 13% below IPO price. Thus, education sector has rarely had a good run on the bourses.To conclude, on expensive valuations, investors can give this IPO a miss.”
Standard disclaimer:  I am not a SEBI registered analyst. I may have vested interest in every stock I discuss. Please do your own due diligence as stock market investments have high degree of inherent risk.