HDFC Sec: Subscribe to ICRA IPO

HDFC Secutiries Retail Research, in a research report released on March 15, has asked investors to apply for listing gains.

The report said: "At a price band of Rs 275"� 330, the stock is offered at 15.2x"�18.2x FY07 fully diluted EPS. Given the steady economic growth, visibility in revenues on account of consolidation and widening of services, one could see continued growth in topline and bottomline of the company.

"The new segments like the information technology services and outsourcing services could bring in large contracts from the IT sector thus giving a thrust to margins

going forward apart from diversifying revenue streams. Any move in future by Moody's to hike its stake in the company from the current 28.1% (Post issue) could be a further trigger.

"Selling shareholders of ICRA are offering shares at 15.2x "� 18.2x FY07 EPS (Post issue). This is cheap compared to the valuation at which its large competitor, CRISIL, quotes. Although CRISIL is much larger in terms of size/services offered and S&P holds 55% of CRISIL's equity, the IPO of ICRA offers scope for gains due to expected narrowing of

the valuation difference unless the valuation of CRISIL itself falls dramatically by the time ICRA's shares are listed. One could apply in this issue for listing gains."

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