Global Vectra Helicorp Ltd IPO (Global Vectra IPO) Detail

Price of Global Vectra Helicorp Limited IPO has been fixed at Rs 185/-.

The issue has been subscribed 3.50 times. The total bids received for the issue is 1,22,47,980 against its total issue size of 35 lakh shares.

Financial Express review of Global Vectra Helicorp Ltd.

In the wake of the current turmoil of the airline industry we have yet another player set to tap the market. However, Global Vectra Helicorp Ltd (GVHL) is not comparable to the other large and fancy players.

Promoted by an IITian, Ravinder Kumar Rishi, Global Vectra Helicorp generates its business as one of the largest dedicated offshore transportation services helicopter companies in India. Currently, it has 14 Bell 412 helicopters each having 13 passenger seats and two pilot seats.

The current initial public offer of 35,00,000 equity shares of Rs 10 each for cash at a premium to be decided through the book-building process, will largely be used to fund expansion of the fleet and create infrastructure .

Currently GVHL has infrastructure at the Juhu Airport, Mumbai, for operations and maintenance of its fleet. It also has a forward base at Rajamundri and Vizag for its east coast operations.

The price band for the issue has been fixed between Rs 175 and Rs 200 per equity share of Rs 10 each.

GVHL, the flagship, however reported a turnaround in 2005-06 after an aberration in 2004-05 where high operational expenses took its toll.


Financials:

For the year ended March 2006, GVHL earned revenue worth Rs 89.8 crore, leading to a net profit of Rs 7.8 crore. This represented a growth of a whopping 70% in the top line over the previous year.

This growth was brought about by a similar rise in operational capacity of helicopters which increased from six in FY05 to 11 in FY06.

The profit after tax also grew substantially as GVHL reduced its lease expenses considerably. In FY05 the company had recorded a loss of Rs 68 lakh, thanks to high operational expenses. Going ahead, GVHL sees an increase in the copter capacity to 20 in the current fiscal. This would entail an increase in revenues.


Valuation:

Based on the weighted average EPS of Rs 4.19, P/E works out to 41.2 times on the lower end of the price band and 47.7 times on the on the upper end of the price band. The weighted average return on net worth works out to a healthy 25.70%.

Since GVHL is in a niche business of transportation, there are no listed peers that one can compare them with.

The company competes with the likes of Pawan Hans, United Helicharters and Deccan Aviation. There are number of other small-time players.

The company proposes to reserve 50% of the total offer for allocation to qualified institutional buyers on a proportionate basis and 15% will be reserved for allotment on a proportionate basis to non-institutional investors. The balance 35% will be reserved for allotment to retail individual bidders.

Outlook:

The business dynamics dictate that GVHL will be in a position to record growth in revenues as the capacity grows from 11 helicopters to 29 helicopters by FY09. The opening up of the oil exploration sector and new entrants tapping the offshore avenue augurs well.

On the operational side, the ability to manage fuel costs is extremely critical. Rate fluctuations and availability both can dampen profitability. Also, the business focus is extremely dependent on offshore structures. Around 64% of the current business for GVHL is sourced from Bombay High. Given this, experts reckon that maintaining consistent profitability in this sector will always be a challenge.