HDFC Securities is of the view that the initial public offering of SKS Microfinance is expensive but still can give listing gains.

“SKSML has issued shares in the past 15 months to private equity investors @ Rs.300 per share. The current issue is priced a bit on the expensive side (31.4-36.3 times its FY10 EPS and 5.77-6.68 times its BV for FY10). Its smaller peer SE Investments has also risen 200% over the past 4-5 months aided by Bonus and split announcements. On a comparative basis with its peer, SKSML does not seem too expensive.

However compared to Banks and Finance companies, it seems expensive based on P/E, dividend yield and P/BV basis. On a post issue basis, however the P/BV could come down, mainly due to the premium collected in the issue. Given its size, the present institutional investors, the recent growth and prospects going forward and the fancy towards the sector, the issue could still give some listing gains,” the report said.

SKS Microfinance has entered the capital market to offer 16,791,579 shares in the price-band of Rs 850-985 per share.

It plans to utilise the proceeds to augment capital base to meet future capital requirements and to achieve the benefits of listing on the stock exchanges. The issue closes Monday.

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