The Hindu Business Line : JRG Securities: Avoid

The public offer of JRG Securities may be avoided, as we believe there are, and will be, superior exposures to the securities broking industry in the listed space.

Given the small base, JRG may exhibit good growth rates due to the boom in the equity market. But JRG lacks unique selling points that differentiate it from the rest. However, from a long-term perspective, the company's ability to exhibit exceptional growth compared to its peers would determine returns; we believe the risks are high and the returns may not be commensurate.

The prospects for bigger and established players with a longer track record in the securities broking business appear to be stronger. We would be more comfortable taking exposures in stocks such as Geojit or IL&FS Investmart which are better placed in terms of diversified revenue streams, client profile and a pan-India presence.

RETAIL CLIENT BASE

JRG Securities caters to the retail segment and does not have institutional clients. A pure retail presence can be risky though the segment is growing at a fast pace. This segment is more susceptible to volatilities and competitive pressures. Retaining customers could be a big challenge as competition hots up. The ability to provide value-added services at low costs and deeper penetration would be the key differentiator. For JRG, the cost of expanding and maintaining a pure retail client base could also weigh on the profitability.

WEST ASIA OPPORTUNITY

JRG plans to expand in a big way in West Asia. Though a fast growing market with immense potential, entrenched players are in a better position to take advantage of the growth there due to the first mover advantage and the benefit of an established brand name.

Offer details: JRG Securities plans to raise Rs 14.5 crore by issuing 36.25 lakh shares of Rs 40 each.

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