Review By on July 20, 2016
Prabhat Telecoms (India) Ltd (PTL) is engaged into design, assemble, and customize import and distribution of mobile handsets, wireless dongles / data-cards, data products and mobile / telecom accessories. The company sells feature mobile handsets under brand name “V3” Mobiles and internet data cards & smart phones / tablets, fixed wireless terminal and high end telecom devices under brand name “Xccess”. PTL also sell accessories like screen guard, Memory card etc under the brand name “Platinum”. The company is also a distributor of CDMA handsets for TTML for Mumbai Circle. It sells CDMA product to chain of distributors PAN India through TTML/TTSL corporate tie-ups and also sells product through organized retail chain like The Mobile Store, Mobile plus etc and through more than 15 online portals.
For listing requirements of the company, it is coming out with a maiden SME IPO of 2200000 equity share of Rs. 10 each through offer for sale at a fixed price of Rs. 51 per share to mobilize Rs. 11.22 crore. Issue opens for subscription on 22.07.16 and will close on 26.07.16. 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 managed by Navigant Corporate Advisors Ltd. and Cameo Corporate Services Ltd is the registrar to the issue. Having issued shares at par between 2007 and 2009 it issued shares in a price range of Rs. 20 to Rs. 200 per share during 2010 to 2013 and also issued bonus in the ratio of 7 for 10 in March 2013. Being offer for sale, its current paid up equity post IPO remains same at Rs. 8.32 crore.
On performance front, the company has posted turnover and net profit of Rs. 215.42 cr. / Rs. 3.53 cr. (FY13), Rs. 298.15 cr. / Rs. 3.11 cr. (FY14) and Rs. 304.23 cr. / Rs. 1.13 cr. (FY15). For 10 months ended on 31.03.16 it has clocked in turnover of Rs. 258.44 crore with a net profit of Rs. 0.75 cr. Thus while its top line has been improving, its bottom line has shown declining trends. Fall in profit is attributed to higher provisions for depreciation and interest. If we annualize the latest earnings and attribute it to the paid up equity then the asking price is at a PE of around 47 plus which makes it a pricy issue. The company has no listed peers to compare with.
On merchant banker’s front, this is the first IPO from its stable and has no track record.
Conclusion: Past four years working is not supporting the asking price which is at a higher PE. Only risk avers investors with surplus funds may consider long term investment. Other can ignore this IPO.
Review By on July 20, 2016
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 Prabhat Telecoms (India) Ltd. offers an early investment opportunity in Prabhat Telecoms (India) Ltd.. A stock market investor can buy Prabhat Telecoms IPO shares by applying in IPO before Prabhat Telecoms (India) Ltd. shares get listed at the stock exchanges. An investor could invest in Prabhat Telecoms IPO for short term listing gain or a long term.
Read the Prabhat Telecoms IPO recommendations by the leading analyst and leading stock brokers.
Prabhat Telecoms IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Prabhat Telecoms IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Prabhat Telecoms IPO?"
Our recommendation for Prabhat Telecoms IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Prabhat Telecoms IPO.
The Prabhat Telecoms IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Prabhat Telecoms IPO allotment status to check.
