At a time when securities brokerage business is going a tough phase due to the bear market, Indiabulls Securities, the largest online brokerage firm in India is scouting for firms to buy it out. But there is a big question mark whether there are any takers to bite the bullet?
Indiabulls Finance, one of the largest non banking finance companies which spun off its brokerage business into a separate listed company Indiabulls Securities, has been looking for a possible sell-out for months now. After talks failed with domestic brokerage houses(including Reliance Money of Reliance ADAG), the firm is now scouting for international buyers.
According to this report, Indiabulls talks with Reliance Money did not materialise into a deal as the asking price was much higher than what was R-ADAG ready to shell out.
Indiabulls Securities had reported 26% decline in profit at Rs 75.1 crore in the first half of this year, from Rs 101 crore in the same period last year. In the second quarter of this year it reported a profit of Rs 37.6 crore on revenues of Rs 119 crore. The profit was down 34 per cent from Rs 56.6 crore in the same period last year.
The firm was demerged out of Indiabulls Financial and started trading from April 2 this year. The stock opened at Rs 300 at BSE and immediately crashed to end the day at Rs 99.05. The stock kept dropping thereafter and closed at Rs 18.4 on Wednesday. The firm has a market cap of Rs 470 crore.
While foreign financial firms could look at a possible deal, valuations would be an issue as the average historical price which would be used for calculating the mandatory open offer would be pretty high. This could be a stumbling block as any buyer would look at realistic valuations given the current scenario.