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Channel Nine Entertainment Ltd IPO Review (Avoid)

Review By Dilip Davda on Feb 19, 2013

As now budget countdown has begun, main stream IPOs are taking a pose, but BSE SME platform IPO marks hat trick with the third IPO of Channel Nine Entertainment Ltd. opening on 22.02.13. Details of this IPO are as under:

This Delhi based company was incorporated in 2002 and is engaged in the production, distribution of films, television serials, corporate/feature films, documentaries and marketing of sports and entertainment events. It has to its credit distribution of 19 films and 5 TV Serials so far.

Now it mulls financing of two films production, strengthening its distribution network and brand building exercise and to part finance these, it is offering 4668000 equity shares of Rs. 10 each at a fixed price of Rs. 25 per share. The issue opens for subscription on 22.02.2013 and will close on 26.02.2013. Issue is lead managed by Guiness Corporate Advisors Pvt. Ltd. and Beetal Financial and Computer Services Pvt. Ltd is the registrar to the issue. Minimum application is to be made for 6000 shares and n multiples thereof thereafter. Post allotment, its shares will be listed on BSE SME platform.

Being capital intensive industry, after raising initial capital at par, it made preferential allotment of equity during 2002 to 2011 in a different price band of Rs. 23 -750 and has also issued the bonus shares in the ratio of 3 shares for every 1 share held in November 2012 that enhanced the equity base to Rs. 10.68 crore which will further rise to Rs. 15.51 crore post this issue. However the preferred to give financial details till 31.10.2012 on old equity so that it can expressed some positive data.  Its NAV as on 31.10.12 of Rs. 113 gets diluted to Rs. 14.14 post bonus and IPO and thus it is an expensive offer.

The company's average EPS for last three fiscal stands at Rs. 0.36 and for the period ended 31.10.2012 at Rs. 0.76 which is on old equity on pre-bonus basis. If we attribute the hike post bonus and the IPO, EPS will get drastically diluted to a level of Rs. 0.01 and thus its asking price will be around 2500 P/E. Its lead manager has On its Merchant Banker's track record front, it had managed 3 IPOs in the past out of which 2 IPOs gave negative return on listing.


Conclusion / Investment Strategy

 Better to avoid this expensive offer.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Feb 19, 2013

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 before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

Channel Nine Entertainment IPO FAQs

  1. 1. Why Channel Nine Entertainment IPO?

    The initial public offer (IPO) of Channel Nine Entertainment Ltd offers an early investment opportunity in Channel Nine Entertainment Ltd. A stock market investor can buy Channel Nine Entertainment IPO shares by applying in IPO before Channel Nine Entertainment Ltd shares get listed at the stock exchanges. An investor could invest in Channel Nine Entertainment IPO for short term listing gain or a long term.

  2. 2. How is Channel Nine Entertainment IPO?

    Read the Channel Nine Entertainment IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Channel Nine Entertainment IPO what should investors do?

    Channel Nine Entertainment IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Channel Nine Entertainment IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is Channel Nine Entertainment IPO good?

    Our recommendation for Channel Nine Entertainment IPO is to avoid.

  5. 5. Is Channel Nine Entertainment IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Channel Nine Entertainment IPO.

  6. 6. When will Channel Nine Entertainment IPO allotment status?

    The Channel Nine Entertainment IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Channel Nine Entertainment IPO allotment status to check.

  7. 7. When will Channel Nine Entertainment IPO list?

    The Channel Nine Entertainment IPO will list on Tuesday, March 12, 2013, at BSE SME.