Interestingly, the fundamentals of the company hardly justify a premium of Rs 40 and the promoter seems to be harping more on the current bullish sentiments on the stock markets. The earnings of Rs 2.02 for fiscal 1999 discount the offer price of Rs 50 by a multiple of as high as 24.6. The discounting is very high, especially when the NBFC stocks are poorly discounted on the bourses.

Euroasian Offshore Investments, the new promoter of Euroasian Securities, had acquired 1.78 crore equity shares at a price of Rs 10 from the Lloyds group, the old promoters, in March 1998. Another promoter Dalhousie Securities Pvt Ltd had acquired 61 lakh equity shares at a price of Rs 1.5 from the erstwhile promoters.

After acquiring the equity shares at Rs 10, ahead of the offer for sale, Euro Offshore Investments transferred 80 lakh equity shares to its three wholly-owned subsidiaries -- Euro Allied Ltd, Euro Discover Ltd and WAYS Inc -- at a price of Rs 53.1. Importantly, the transfer of the shares at a price of Rs 53 was from the promoter to its three wholly-owned subsidiaries.

Now, the offerer, Euro Offshore Investments, is reaping a bonanza by offering 59.9 lakh equity shares at a price of Rs 50 to the public. Against the acquisition price of Rs 5.9 crore, the offerer is hoping to reap Rs 29.95 crore for 59.9 lakh shares.

After the offer, the promoters' stake will go down from 100 per cent to 75 per cent.

The company is engaged in the business of investments, securities brokerage and related financial services through its sub-brokers. The company has corporate membership with the Bombay Stock Exchange and the National Stock Exchange, Over the Counter Exchange of India (OTCEI) and the Pune Stock Exchange. However, its NSE terminal has been temporarily disconnected pending approval of a revised shareholding pattern.

The past financial performance of Euroasian Securities has not been impressive, except for fiscal 1999. The company had been operating on a very low net profit margin till fiscal 1998. However, net profit margin saw a sudden jump from just 1.43 per cent in fiscal 1998 to 30 per cent in fiscal 1999.

On a total income of Rs 16.73 crore, the company reported a net profit of Rs 28.73 lakh for fiscal 1997. For fiscal 1998, total income fell to Rs 9.03 crore and in tandem, net profit slipped to Rs 13 lakh. Interestingly, for fiscal 1999, on a marginal improvement in turnover to Rs 10.86 crore, net profit zoomed to Rs 3.35 crore.

Importantly, the company has not provided an interest of Rs 1.02 crore for ICD/loan availed from its associates. The company had a earning per share of 47 paise and 21 paise for fiscal 1997 and fiscal 1998, respectively. For fiscal 1999, EPS works out to Rs 2.03. The offer document highlights 17 risk factors.

One of the important risk factors is that eight associate companies, which were incorporated in December 1998, are yet to start their operations. The offer for sale opens on October 27 and closes on October 30. The shares are proposed to be listed at Pune and Bangalore.