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Review By Dilip Davda on Jul 23, 2017
Global Space Technologies Ltd (GSTL) is a Software Product Platform Company with focus on Enterprise Mobility SaaS based solutions, providing integrated software & hardware product platforms and solutions to enable large and medium enterprises embrace mobility & digital technology for their business enhancement. The Company provides domain specific mobility & digital technology products by leveraging contemporary web, mobile technology, big data, analytics & custom hardware to deliver customizable and configurable solutions to different industry verticals. GSTL launched its flagship product for pharmaceutical industry in the year 2011. Its technology platform has been constantly evolving and now includes industry solutions in Banking, Financial Services, Insurance and Education. The company has a considerable client list, which includes some of the reputed pharma companies, banking conglomerates & large education groups i.e. Cipla, Maruti, Ipca, BoI, SBI, Glenmark, Bajaj etc.
To part finance its research and development plans, advertising and sales promotion, working capital and general corpus fund needs, the company is coming out with a maiden IPO of 3034000 equity share of Rs. 10 each at a fixed price of Rs. 66 per share to mobilize Rs. 20.02 crore. Issue opens for subscription on 26.07.17 and will close on 28.07.17. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Choice Capital Advisors Pvt Ltd and Link Intime India Pvt Ltd is the registrar to the issue. Issue constitutes 26.48% of fully diluted post issue paid up capital of the company. Since incorporation till May 2013 it raised equity at par. Thereafter it raised further equity in a price range of Rs. 49 to Rs. 369.68 and has also issued bonus shares in the ratio of 11 for 2 in August 2016. Post issue, its current paid up capital of Rs. 8.42 crore will stand enhanced to Rs. 11.46 crore.
On performance front, the company has posted turnover/net profits of Rs.6.16 cr. / Rs. 0.50 cr. (FY14), Rs. 10.80 cr. / Rs. 0.85 cr. (FY15), Rs. 13.98 cr. / Rs. 0.62 cr. (FY16) and Rs. 17.28 cr. / Rs. 1.02 cr. (FY17). For last three fiscals, its average EPS has been Rs. 1.05 and RoNW at 12.86%. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of 74 plus against industry composite of 20. Issue is priced at a P/BV of 5.38. Thus pricing is done on a very aggressive basis.
On merchant banker’s front, this is the second mandate from its stable and the previous issue opened at a 5% premium to offer price.
Conclusion: No harm in giving this greedily priced offer a miss.
Update 07/24/2017
After interaction with the merchant bankers, ipo valuation is done in line with global peers which trades at more than 8 times P/E of this company. Peers shown in prospectus are not comparable in true sense as they are not in healthcare segment. GSTL derives over 60% revenue from healthcare biz and is rapidly growing. FY 16 bottom-line decline is due to R and D and product development provisions. Management is confident of maintaining the growth in top and bottom lines. This is the fourth mandate from merchant banker and the last IPO opened at 5% premium to offer price on listing day.
Based on this we have revised conclusion as:
Conclusion : Investment may be considered for short to long term. (Subscribe)
Review By Dilip Davda on Jul 23, 2017
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 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
The initial public offer (IPO) of Global Space Technologies Ltd offers an early investment opportunity in Global Space Technologies Ltd. A stock market investor can buy Global Space IPO shares by applying in IPO before Global Space Technologies Ltd shares get listed at the stock exchanges. An investor could invest in Global Space IPO for short term listing gain or a long term.
Read the Global Space IPO recommendations by the leading analyst and leading stock brokers.
Global Space IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Global Space IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Global Space IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Global Space IPO.
The Global Space IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Global Space IPO allotment status to check.
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DRHP
The PE is 53.66, since no Indian peer is exactly comparable we checked the Global pears in the similar space, Veeva systems got listed at Nasdaq at a PE of 202
I think it''s wrong to compare this company with Indian IT services peers, it''s a SAAS based product company with IP, which can have much higher PE than what is expected by the company
Probably this would be first IP driven software product company in stock market
I have personally invested after doing all these due diligences