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Infibeam Inc. IPO review (Subscribe)

Infibeam Incorporation Ltd (IIL) is an e-commerce company focused on developing an integrated and synergistic e-commerce business model. It owns and operates the Infibeam BuildaBazaar (BaB) e-commerce marketplace, which provides cloudbased, modular and customizable digital solutions and other value added services to enable merchants to set up online storefronts. As part of IIL’s integrated e-commerce ecosystem, the company operates, a multi-category e-retail website. Its integrated business model enables us to provide comprehensive, multi-channel and multiscreen value added services to merchants.

As of December 31, 2015, it had 12 logistics centres across 11 cities in India including in Mumbai, Bengaluru, Delhi, Gurgaon, Kolkata, Hyderabad, Jaipur, Pune, Lucknow, Ahmedabad and Chennai, and currently selectively outsource some of its logistics services. In addition, as of December 31, 2015, IIL had six warehouses located at Delhi, Gurgaon, Bengaluru, Ahmedabad, Mumbai and Kolkata. The company intends to significantly expand logistics network in the future to strengthen fulfillment capabilities for the BaB Marketplace as well as e-retail operations.

To part finance its plans for setting up of cloud data centers, 75 logistics centers, purchase of property for shifting of offices and to meet general corpus fund needs, the company is coming out with a maiden IPO via book building route. It is issuing 1.25 crore to 1.042 crore equity share of Rs. 10 each (based on lower and upper price band) within a price band of Rs. 360-432 (a wide gap of 20% in lower and upper price band). IIL intends to mobilize Rs. 450 crore via this issue. It is a primary issue and thus entire money goes to company post IPO.  Minimum application is to be made for 34 shares and in multiples thereon, thereafter. Issue opens for subscription on 21.03.16 and will close on 23.03.16. Post allotment, shares will be listed on BSE and NSE. BRLMs to this issue are SBI Capital Markets Ltd, Elara Capital (India) Pvt Ltd., and Link Intime India Pvt Ltd is the registrar to the issue.

On performance front, the company (on consolidated basis) has been in red for last three fiscals with a minus average EPS of (Rs. 4.56). From FY 2012 to 2015 its top line jumped from Rs. 129.19 crore to Rs. 295.22 crore. Its losses that also kept surging from FY 2012 to 2014 from Rs. 10.82 crore to Rs. 26.89 crore reduced to Rs. 9.78 crore for FY 2015. Although its top line posted CAGR of 31% between 2012 and 2015, it remains in red. Because of its loss making status, it has reserved only 10% for retail investors in this IPO. However, for first half ended 30.09.15 it has earned net profit of Rs. 6.58 crore on a turnover of Rs.174.63 crore. While is issued equity at par on many occasions till 2015, it also allotted shares in a price range of Rs. 11 to Rs. 475 between May 2012 to December 2014. It has also issued bonus along with swap equity on September 10, 2010. Its current paid up equity capital of Rs. 42.67 crore will stand enhanced to Rs. 55 to Rs. 53 crore plus (based on lower and upper price band) post this IPO. If we annualized current earnings and attribute it to the fully diluted equity post IPO then the asking price is at a P/E of 157 to 147 (based on lower and upper price band). There are no listed peers to compare with as the company is the first mover in the segment.

Management has informed that the company is putting major thrust on the servicing aspect that is highly rewarding business and last two year’s profit generation is mainly on this account. However, it still has carried forward losses and may take two to three years to wipe out that thus servicing to equity will take some time.

On merchant banker’s front, for last three fiscals, this is the sixth mandate from SBI Capital that has poor trends for its past mandates and Elara is having this as a maiden offer from its stable.

Conclusion / Investment Strategy

The Company’s performance has been in negative zone till last year, its profit generation has just started. As per reports, it may have to deal with taxation issue that have dented the e-commerce platform with some cases on companies like India Mart. Hence risk savvy long term investors may consider investment at a lower price band.

By Dilip Davda on Mar 17, 2016

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).

About Dilip Davda

Dilip Davda (SEBI registered Research Analyst-Mumbai), a freelance journalist for more than 25 years, is a stock market analyst and news article writer. Since 1985, he has contributed to print media, electronic media and often appears on TV channels as visiting stock analyst. His articles are regularly publishes in Smart Investment (English and Gujarati weekly published from Ahmedabad), Free Press Journal and many other news papers & magazines. He is also a visiting stock analyst on DD News TV Channel.



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