Review By on September 25, 2017
Reliable Data Services Ltd. (RDSL) is primarily engaged in providing customized services to various Banks, financial institutions and other manufacturing industries in the field of management services, transaction processing services, human resources services and other allied services. Company has entered into agreement with various leading MNC and Private Sector Banks like Standard Chartered Bank, Deutsche Bank, HSBC, HDFC Bank Ltd, ICICI Bank, Axis Bank, Citibank and Yes Bank for providing various support services. Agreements which RDSL has entered with banks are short term and long term depending upon the type of services and its terms and conditions. Subsequently, few Public Sector Banks were also added to it’s client list such as IDBI, Union Bank and Corporation Bank. The Company is now engaged in collection services with mobile based application developed by banks, image based data processing and other backend processing on behalf of various banks. This opened a new horizon for it and these operations increases the revenue significantly in few years by spreading services to various banks across India.
To part finance its capital expenditure plans, repayment of loans, working capital and general corpus fund needs, RDSL is coming out with a maiden IPO of 2600000 equity share of Rs. 10 each at a fixed price of Rs. 57 per share to mobilize Rs. 14.82 crore. Issue opens for subscription on 27.09.17 and will close on 03.10.17. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue constitutes 30.23% of the post issue paid up capital of the company. Issue is solely lead managed by Swastika Investmart Ltd. and Skyline Financial Services Pvt. Ltd. is the registrar to the issue. It has issued equity shares at par and has also issued bonus shares in the ratio of 8 for 1 in March 2010 and 5 for 1 in July 2017. Post issue, its current paid up equity capital of Rs. 6 crore will stand enhanced to Rs. 8.60 crore. Cost of acquisition of shares by promoters is just Rs. 0.60 per share.
On performance front, RDSL has (on a consolidated basis) posted turnover/net profits of Rs. 20.49 cr. / Rs. 1.48 cr. (Fy14), Rs. 24.72 cr. / Rs. 1.72 cr. (FY15), Rs. 26.40 cr. / Rs. 1.29 cr. (FY16) and Rs. 34.61 cr. / Rs. 1.62 cr. (FY17). Despite growth in top lines for last two fiscals, it has seen pressure on margins. RDSL has reported an average EPS of Rs. 2.55 and average RoNW of 16.30 for last three fiscals on an equity base of Rs. 1.00 crore. Issue is priced at a P/BV of 3.2. If we attribute latest earnings on fully diluted post issue equity then asking price is at a P/E of 30 plus against industry composite of around 18 P/E. Thus issue is highly priced.
On merchant banker’s front, this is the 6th mandate from its stable and last five listings have given between 4 to 25% gains on the day of listing.
Conclusion: Considering high price offer, there is no harm in giving it a miss.
Review By on September 25, 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 Reliable Data Services Ltd. offers an early investment opportunity in Reliable Data Services Ltd.. A stock market investor can buy Reliable Data Services IPO shares by applying in IPO before Reliable Data Services Ltd. shares get listed at the stock exchanges. An investor could invest in Reliable Data Services IPO for short term listing gain or a long term.
Read the Reliable Data Services IPO recommendations by the leading analyst and leading stock brokers.
Reliable Data Services IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Reliable Data Services IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Reliable Data Services IPO?"
Our recommendation for Reliable Data Services IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Reliable Data Services IPO.
The Reliable Data Services IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Reliable Data Services IPO allotment status to check.
