Nu Tek India is entering the capital market from 29th July 2008 to 1st Aug 2008 with a public issue of 45 lakh equity shares of Rs.10 each in the band of Rs.170 to Rs.192. Of this, fresh issue is of 35 lakh shares while offer for sale is of 10 lakh shares.
The company is a Telecom infrastructure service provider offering infrastructure rollout solutions for both mobile and fixed telecommunications networks by offering services to Telecommunication Equipment Manufacturers, Telecom Operators and third party infrastructure leasing companies.
Among Telecom Equipment Manufacturers, the company clients are Nokia, Ericsson, Motorola and Nortel while amongst Telecom Operators are Tata Tele, R-Com, Bharati, Idea, Vodafone and Tata Communications. Presently, the company is executing works of Rs.137 crores for its various clients.
For FY 08 the total income of the company was at Rs.97 crores with EBITDA of Rs.32 crores, giving a margin of 33.66%. PBT was placed at Rs.30.29 crores while PAT was at Rs.21.27 crores, resulting in an EPS of Rs.15.50 on present equity base of Rs.13.76 crores. FY 08 the company has posted a growth of 50% in topline while 100% in bottomlines.
Due to rapid increase in telecom subscribers which are now at 308 million of which 269 million are wireless subscribers, service providers and equipment makers need to focus on network quality as a competitive necessity. As the company is an end to end solution provider with track record of over 12 years of project management for all type of customers with 1,083 permanent employees, enjoys a strong position in the domestic market. The company now has estimated a capex of Rs.89 crores, of which, Rs.21 crores is for overseas acquisitions to enable the company to have overseas foothold. Also, Rs.44 crores is for capital expenditure. Though presently, the company is debt free but has Rs.50 crores, projects for Customers Under Progress and Rs.47 crores as Sundry Debtors. These are partly financed by current liabilities of Rs.34 crores, which if curtailed, could improve the operating margins of the company, by procuring the materials at the competitive rates.
Fresh infusion of the funds would only supplement the present operations which would improve its growth. Even equity dilution, considering offer for sale is 25.50% only, with post-issue equity at Rs.17.26 crore. Due to huge growth potential of the telecom sector, the company should be able to have a CAGR of 40% in topline and bottomline for the next three years.
Share at lower band of Rs.170 is definitely attractive. However, even at the upper band of Rs.192, based on historic earnings, it is issued at a PE multiple of about 12 times, while at about 10 times, based on FY 09 earnings. Even this is considered quite good, and price is likely to get discovered at the upper band of Rs.192 and even at that level it can prove to be a rewarding investment.
Monday, July 28, 2008
Nu Tek India: 'New' Issue, Great 'Take'
Sunday, July 27, 2008
Grey Market Premium Dt. 27-7-2008
Grey Market Premium Dt.
| Company Name | Offer Price (Rs.) | Premium (Rs.) |
| Birla Cotsyn ( | 12 to 14 | Discount |
| Vishal Information Technologies | 140 to 150 | 7 to 9 |
| NU TEK India Ltd. | 170 to 192 | 12 to 15 |
| Note: Dont subscribe for issue by just seeing premium Price as it may change anytime before listing. | ||
Thursday, July 24, 2008
Vishal Information Technologies: V Shall not
Vishal Information Technologies is entering the capital market from 21st July 08 to 24th July 08 with a public issue of 27.90 lakh equity shares of Rs.10 each, in the price band of Rs.140 to Rs.150 per share. Of this, fresh issue is of 17.90 lakh shares while offer for sale is of 10 lakh shares.
The company is a very tiny player in the field of data digitalization, E-Publishing, digital library, E-Accounting and Fund Accounting, which covers all the range in IT enabled services other than voice call centre. However, the scale of operations of the company is quite small with topline at Rs.41 crores for FY 08 with a PAT of Rs.12.36 crores, resulting in an EPS of Rs.13.90.
Share now being offered in the band of Rs.140 to Rs.150, is resulting in a PE multiple of 10 to 11 times, based on historic earnings. Present valuations of such companies in the secondary market are quite low at a PE multiple of 4 to 5 times, which has much larger scale and better profitability.
The company is now expanding its seat capacity from 250 to 450 for Data digitalization , of E-Publishing from 150 to 250 while of Digital Library from 75 to 100 seats. All this is estimated to cost Rs.30 crores including issue expenses. This is being met by preferential allotment of 3.10 lakh shares made to IDBI in March 08 at Rs.120 per share for Rs.3.72 crores while about Rs.25 crores would come from the proposed issue.
As discussed earlier, the valuations are definitely stiff and are for a very small amount for which primary market is not helping the companies to mobilize such an amount unless and until it is done with hand in gloves with the operators. The net worth of the company at Rs.55 crores is largely blocked in sundry debtors of Rs.30 crores, (a cycle of about 9 months) and loans & advances of Rs.6.50 crores. Such a long debtor cycle is always risky for any business. Also, presently the company has no borrowings and hence it would have been prudent for the company to go for borrowings which would have been a cheaper route and even debt equity ratio would have remained at a very low level of 0.5 : 1.
The recent experience of such small IPOs have shown that no response has been received from the public and such IPOs were managed by the operators in collusion with the promoters of the company, ultimately causing huge loss to the investors and traders.
A clear advice is to remain away from the issue as much better stocks are available in the secondary market.
Sunday, July 20, 2008
Grey Market Premium Dt. 20-7-2008
Grey Market Premium Dt.
| Company Name | Offer Price (Rs.) | Premium (Rs.) |
| Somi Conveyor Belting | 35 | 3 to 5 |
| Birla Cotsyn ( | 12 to 14 | Discount |
| Vishal Information Technologies | 140 to 150 | 7 to 10 |
| Note: Dont subscribe for issue by just seeing premium Price as it may change anytime before listing. | ||
Sunday, July 13, 2008
Grey Market Premium Dt. 13-7-2008
Grey Market Premium Dt.
| Company Name | Offer Price (Rs.) | Premium (Rs.) |
| KSK Energy Venture | 240 | Discount |
| Somi Conveyor Belting | 35 | 3 to 5 |
| Birla Cotsyn ( | 12 to 14 | Discount |
| Note: Dont subscribe for issue by just seeing premium Price as it may change anytime before listing. Subscribe only considering Fundamental of the companies | ||
Sunday, July 6, 2008
Grey Market Premium Dt: 6th-Jul-08
| Company | Open/Close | Offer Price | Premium | Kostak Rates |
|---|---|---|---|---|
| Birla Cotsyn | 30 June - 04 July | 15 to 18 | 01.50 to 02 | ------- |
| KSK Energy Venture Limited | 24 June - 27 June | 240 to 255 | Discount | |
| Somi Conveyor Beltings Limited | 24 June - 27 June | 35 | 03 to 04 | ------- |
| Lotus Eye Care | 12 June - 20 June | 38 - 42 | 01 to 03 | ------- |
| Archidply Industries Limited | 11 June - 17 June | 70 - 80 | 03 to 04 | ------- |
| First Winner Industries Limited | 09 June - 17 June | 115 - 125 | 01.50 to 02 | ------- |
Disclaimer: grey market rates changes everyday and do not subscribe to any IPO just on the basis of grey market rates. do check the fundamentals of the company.
Tuesday, July 1, 2008
Birla Cotsyn: Dont get caught here
Birla Cotsyn is entering the capital market from 30th June 08 to 4th July 08 with a public issue of Rs.144.18 crores and after making reservation for promoters (Rs.36.65 crores) and employees (Rs.7.25 crores) the size of net public issue is Rs.100.28 crores. It looks doubtful that employees would be subscribing to the issue and hence public issue size could be Rs.108 crores.
While analyzing a company like this, you fail to understand whether you should praise the courage of the BRLM or the promoters to come out with such a poor issue. It does not deserve a par tag, forget a band of Rs.15 to Rs.18 per share!
The company belongs to Yash Birla and P. B. Bhardwaj Group (PBG). Though investors are familiar and have burnt their fingers with Yash Birla Group, track record of PBG is not known. The promoters of the company have been litigating with 420 cases, either having filed by them or against them.
Though the company has been in existence for the last over 65 years, the textile business commenced only in August 2006, when it acquired 18,304 spindles of Khamgaon Syntex (I) Ltd and started manufacturing synthetic yarn. Financial performance of the company was pathetic to talk of least. Till FY 06, topline never crossed Rs.4 crores while bottomline never crossed Rs.30 lakhs. During FY 07, topline was Rs.55 crores, while bottomline was Rs.2.57 crores. First 9 months of FY 08 had topline of Rs.63 crores, while PAT was Rs.2.52 crores. This results in an EPS of less than Rs.2 on equity of Rs.13.62 crores.
The company has now taken up capex of Rs.320 crores, for setting up 36,000 cotton spindles, 1,728 Rotors, 114 Looms as also Dyeing and Processing unit in three phases. It seems as if the whole capex has been chalked out and structured on a very low scale, having high debt component with long gestation.
Presently, all the textile stock having capacity of almost over 5 times and very good profitability are ruling at a PE of 4 – 5 times. This is despite the fact that these companies are having integrated and well balanced model The present equity of the company of Rs.13.61 crores would rise to Rs.94 crores even if price band gets discovered at the upper band or to Rs.110 crores at the lower band. How will a company be able to post even a moderate level of operation?
Also, PBG has its company Polytex Ltd. and financial performance of this company is not furnished in the performance of Group Companies.
The company has all the concerns about project viability, promoter’s track record, industry prospects, size of the project and market perceptions. Even par tag could be termed as expensive. So, where is the question of contemplating investment even at the lower band of Rs.15 per share?