Jointeca Education IPO Review by KM Global (Avoid)

Review By K.M. Global Financial Services Ltd on Aug 21, 2012

Issue Period: August 16th-21st
Issue Price (Rs): 15.0
Issue Size (Rs Cr): 5.4
Mcap (Rs Cr): 15.0
Listing: BSE SME
Promoters: Mr Vishal Mishra, Mrs. Laxmi Agrawal, Mr. Abhay Gautam

Jointeca Education offers Educational ERP solutions through their product GuruSeva while their business is concentrated mainly in North India. Their product is offered both as a Desktop Application and as a service through the Software as a Service model (SaaS). The main Promoter, Mr. Vishal Mishra has over 14 years of experience in this business.

It is focused on the education, healthcare, publication and workforce management segments and sells its products through 29 dealers. It is targeting 2000 channel partners by 2015. Jointeca has also entered into a MoU with TransNational Computer LLC, Dubai for providing complete education management solutions.

Risks

  • Product Failure - The company has no experience in deploying cloud based services. This gives little confidence to investors regarding management's ability to scale up.
  • Rich Valuations - The valuation is expensive as the company doesn't have any notable intellectual property rights which can help form a base valuation for the stock.

Conclusion / Investment Strategy

We recommend that investors avoid Jointeca Education's IPO as the promoter's track record for growth is unproven while the entry barriers for their business seem weak. The company has done 1 cr of sales and are looking for a valuation of 15 cr.

Please note that our call is based on a fundamental evaluation of the company while the stock price for small issues is often affected by technical factors which are difficult to predict.

Reviewer recommends Avoid to the issue.

Review By K.M. Global Financial Services Ltd on Aug 21, 2012

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