Review By on July 23, 2017
Global Space Technologies Ltd (GSTL) is a Software Product Platform Company with focus on Enterprise Mobility SaaS based solutions, providing integrated software & hardware product platforms and solutions to enable large and medium enterprises embrace mobility & digital technology for their business enhancement. The Company provides domain specific mobility & digital technology products by leveraging contemporary web, mobile technology, big data, analytics & custom hardware to deliver customizable and configurable solutions to different industry verticals. GSTL launched its flagship product for pharmaceutical industry in the year 2011. Its technology platform has been constantly evolving and now includes industry solutions in Banking, Financial Services, Insurance and Education. The company has a considerable client list, which includes some of the reputed pharma companies, banking conglomerates & large education groups i.e. Cipla, Maruti, Ipca, BoI, SBI, Glenmark, Bajaj etc.
To part finance its research and development plans, advertising and sales promotion, working capital and general corpus fund needs, the company is coming out with a maiden IPO of 3034000 equity share of Rs. 10 each at a fixed price of Rs. 66 per share to mobilize Rs. 20.02 crore. Issue opens for subscription on 26.07.17 and will close on 28.07.17. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Choice Capital Advisors Pvt Ltd and Link Intime India Pvt Ltd is the registrar to the issue. Issue constitutes 26.48% of fully diluted post issue paid up capital of the company. Since incorporation till May 2013 it raised equity at par. Thereafter it raised further equity in a price range of Rs. 49 to Rs. 369.68 and has also issued bonus shares in the ratio of 11 for 2 in August 2016. Post issue, its current paid up capital of Rs. 8.42 crore will stand enhanced to Rs. 11.46 crore.
On performance front, the company has posted turnover/net profits of Rs.6.16 cr. / Rs. 0.50 cr. (FY14), Rs. 10.80 cr. / Rs. 0.85 cr. (FY15), Rs. 13.98 cr. / Rs. 0.62 cr. (FY16) and Rs. 17.28 cr. / Rs. 1.02 cr. (FY17). For last three fiscals, its average EPS has been Rs. 1.05 and RoNW at 12.86%. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of 74 plus against industry composite of 20. Issue is priced at a P/BV of 5.38. Thus pricing is done on a very aggressive basis.
On merchant banker’s front, this is the second mandate from its stable and the previous issue opened at a 5% premium to offer price.
Conclusion: No harm in giving this greedily priced offer a miss.
Update 07/24/2017
After interaction with the merchant bankers, ipo valuation is done in line with global peers which trades at more than 8 times P/E of this company. Peers shown in prospectus are not comparable in true sense as they are not in healthcare segment. GSTL derives over 60% revenue from healthcare biz and is rapidly growing. FY 16 bottom-line decline is due to R and D and product development provisions. Management is confident of maintaining the growth in top and bottom lines. This is the fourth mandate from merchant banker and the last IPO opened at 5% premium to offer price on listing day.
Based on this we have revised conclusion as:
Conclusion : Investment may be considered for short to long term. (Subscribe)
Review By on July 23, 2017
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
The initial public offer (IPO) of Globalspace Technologies Ltd. offers an early investment opportunity in Globalspace Technologies Ltd.. A stock market investor can buy Globalspace Technologies IPO shares by applying in IPO before Globalspace Technologies Ltd. shares get listed at the stock exchanges. An investor could invest in Globalspace Technologies IPO for short term listing gain or a long term.
Read the Globalspace Technologies IPO recommendations by the leading analyst and leading stock brokers.
Globalspace Technologies IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Globalspace Technologies IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Globalspace Technologies IPO?"
Our recommendation for Globalspace Technologies IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Globalspace Technologies IPO.
The Globalspace Technologies IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Globalspace Technologies IPO allotment status to check.
