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Jointeca Education Solutions Ltd IPO Review (Avoid)

Secondary market is seeing some positive undercurrent for past two weeks amidst reshuffling of portfolios at the centre. But still we are not seeing any book building process IPO hitting the market for fund mobilization. It is only the SME platform IPOs are managing for fort for a while. No doubt so far out of four listing, we have only seen some abnormal trading on the counter of Max Alert, otherwise all other SME listed companies are faring averagely and maintaining their price level due to compulsion of market making mechanics.

Now we have one more IPO entering this week. Jointeca Education Solutions Ltd. (JESL), a Mathura based company providing a range of IT solutions for achieving superior business results in areas of Enterprise Application Solutions and Integrated IT Solutions since 2001. To part finance its product expansion plan, it is offering 3568700 equity share of Rs. 10 each with premium of Rs. 5 per share (i.e. at a price of Rs. 15 per share) to mobilize Rs. 5.35 crore. Minimum application is to be made for 8000 shares and in multiples thereof. Issue is opening for subscription on 16.08.12 and will close on 21.08.12. Ajcon Global Services Ltd is the Lead Manager and Beetal Financial & Computer Services Pvt. Ltd. is the registrar to the offer. The shares will be listed on BSE SME exchange.

Except for the initial subscription of 5000 shares, all other offers to promoters and their group is made at Rs. 15 per share and that has helped it to post NAV of Rs. 14.97. Post issue the equity capital will be Rs. 10 crore and there are doubts of capital servicing by the company in the medium to long term.

As the company is in operation from May 2011, its EPS for the fiscal 2011-12 was just at Rs. 025 per share thus on the existing equity base, the asking price is at a P/E of 60 and thus it is exorbitantly priced. If we count the IPO proceeds, then the P/E can go much higher. Lead Manager's track record in not available.


Conclusion / Investment Strategy

Only risks aver HNIs can dare to park their funds in this high cost offer for listing gains if any. Based on track record, the gain is negligible despite market making arrangements.

By Dilip Davda on Aug 16, 2012

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. With entry barriers, SEBI wants only well informed investors to participate is such offers. With crazy recent listings, SME IPOs have started drawing attention of investors across the board. However, as SME issues have entry barriers and continued low preference from broking community, any reader taking decisions based on any information published here does so entirely at own risk. Above information is based on information available as on date coupled with market perceptions. 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.

Email: dilip_davda@rediffmail.com

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