The company filed DRHP with SEBI in Sept 2008, hitting the market, after two years. The objects of the issue remain the same. It appears nothing much has changed in the two years, in between. As of March 2010, the company has Rs 226.75cr debt, which is 2.75 times the total net worth. As per ICRA report, the company has experienced liquidity problems in the recent past. The company has significant debt repayment obligation in the medium term. May be, one of the hidden object is for repayment of debts, to improve the liquidity of the company. The debtors’ realization has gone up from 125 days in 2009 to 169 days in 2010.
In the price band of Rs 257 - 266, the issue irrationally priced, considering its past performence and future prospects. IPO grade 2 by ICRA.
At the Cap Price, the company is demanding a PE multiple of 24 on its FY 10 earnings, where as the shares of peers in the industry like Jyothi Structure (12PE), KEC Intl(16PE), Sujana Towers (12PE) are available at cheaper valuation. Even on the RONW front, the company’s performance is lackluster compared to the above peers. There is no justification for such high valuation.
FIRST CHOICE IPO.